April 19, 2023
* Currencies and metals rally on Tuesday
* Metals get whacked in the overnight markets
Good Day… And a Wonderful Wednesday to you! Everything has gone wrong for my beloved Cardinals, so far this spring… It’s a long season, and while there’s plenty of time to get things worked out, I have a very uneasy feeling that it’s going to be a loooooonnnnnggg year! I saw my heart doctor yesterday, and he was quite concerned that I suffered that stroke in January… He was quite happy that I had no ill effects from the stroke, and then looked at my pacemaker’s report, listened to my heart, and told me that I was doing well… And there were no changes, and he’ll see me in 6 months! So, one DR. Appt. down, and two more to go… Thursday and Friday this week… So, this will be the last Pfennig this week, and I’ll pick it back up next Monday… Steve Winwood greets me this morning with his song: Arc Of A Diver… I saw Steve Winwood in concert at our Muny outdoor Ampitheater… It was a great concert!
Well, there was all kind of weird stuff going on yesterday, that I’ll get to after the markets reports, you’re not going to want to miss these goings on, I mean it!
The dollar fought back after losing 3 index points overnight, the dollar won back 1 of those lost points, so in the end the BBDXY lost 2 index points yesterday… No biggie… But there was selling of the dollar, keep that in mind, for the rest of the week… Gold was up nicely at one point in the day, and had to settle for being up just $10.30 to close at $2,006.10… Silver too was up nicely at one point yesterday, but had to settlle for being up just 18-cents, to close at $25.28… Yes, the short paper traders were back this time with just some “trimming”… The price of Oil kept the $80 handle throughout trading yesterday, and the 10-year added 1 basis point to its yield at 3.58%…
Who’s afraid of the Big Bad Wolf? I thought it to be very important that the currencies and metals got back on the rally tracks yesterday, proving that while the price manipulators can take down these asset classes, they can’t keep them down… Very important to traders and investors to see that, the coast is clear, and it’s ok to get back in the water… But the short paper traders saw to it that their trip back o the water was not safe…
In the overnight markets last night…. Well, the dollar wasn’t bought or sold overnight, and its trading in the same clothes as yesterday, at this point… The short paper traders (manipulators) showed up and performed yet another engineered takedown of Gold & Silver… Gold is down $32 this morning, and I can tell you what I think happened… The short paper traders saw Gold gain yesterday, and they didn’t like the talk that all was clear, and so they decided to hit it hard once again, and cause some real damage and concern to investors… Silver is down 44-cents this morning, and it looks like its going to be a very ugly day, which it is already!
The price of Oil slipped another buck and now trades with a $79 handle… lack of demand is outweighing the news that the U.S. Oil supplies are dwindling… And the 10-year just keeps getting sold, with its yield rising to 3.62%…
I just can’t get these short paper traders out of my mind this morning, they have gone and ruined a nice rally in Gold & Silver, and they have no qualms about doing it again and again… I know that I shouldn’t get upset with these bas&*^$ds… I own Gold and I’m not selling it, and so it doesn’t matter to me if Gold gets whacked, because I know that eventually all that will be behind us… Gold is a store of wealth… not a commodity that gets bought an sold willy nilly… so price movements like this shouldn’t get me upset… beathe Chuck, count to ten… now isn’t that better? I guess…
OK… this wierd story is going to lead us off today, because it could very well be the wierdest! So, we all know that the N. Korean Chairman is a nut case, correct? I mean he keeps shooting off Balistic Missiles getting closer and closer to Japan… And now, he has issued a proclomation that he will confiscate all forieng currencies being used… The bulk of those in use in N. Korea are dollar and renminbi… While I doubt that his confiscation of dollars will amount to a hill of beans for dollar issuance, it could bring about other countries implementing the same kind of laws… For instance, I could see China banning dollars, Russia banning dollars, India banning dollars, Brazil banning dollars, and then other countries following their lead… I just think this is something we need to keep an eye on going forward, don’t you?
Next up is this story about war mongering… here it is: “Senior U.S. Defense official Douglas Macgregor said politicians who support Israel are driven by money & the pro-Israel lobby in the US is trying to drag America into war… ‘John Bolton has become very, very rich and is in the position he’s in because of his unconditional support for the Israeli lobby. He is their man on the ground.”
Well, the next story comes from the leaked documents, and that is that the U.S. already has some special operations on the ground in Ukraine… Now, I’m sure Russia has heard about this, and that could lead to escalation … Don’t you think? Scares the bejeebers out of me…
And finally, this isn’t so wierd… China reported that their 4th QTR GDP grew 4.5% from a year earlier, when they were shut down for Covid… They also reported that Retail sales jumped 10.6% in March from a year earlier, the highest level of growth since June 2021. In the January to March months, retail sales grew 5.8%,
A long time ago, i was told by a client that used to do business in China that I should believe only 1/2 of what the Chinese report… But even doing that, they are on the right track to get back to where the were previously!
I have more weird stuff going on, but I don’t have the time or space to include them all… So, let’s move along…
The Chinese renminbi has been gaining VS the dollar too during this time… The currency has been pretty Steady Eddie around 6.96, but recently is has moved to 6.87… Not a super-duper strong move, but when the currency is only allowed to move so much during a day, it’s a nice move, and one that is being noticed by traders and economists, and me!
I also surprised at the strength of the Swiss Franc… They just recently got back to positive rates, it’s not like they are New Zealand and have 5% rates! But any time the franc sees buying like it has recently, it’a a sign that investors are nervous, and are seeking a safe harbor…
The Brazilian real has been on the rally tracks recently, and just this week the real fell below 5.0, for the first time in a month of Sundays.. .Interest rates are high in Brazil, and I mean high at 12.25%, to combat thier own inflation… And those high rates are attracting investors… I’m just saying…
The U.S. Data Cupboard today has the Fed’s Beige Book, which is a combination of the regional banks reports on how the economy is doing in their neck of hte woods… This used to be a very watched piece of data, that now just flies under the radar each month, and gets very little notiice…
To recap.. .The dollar got sold yesterday, but did fight back to win back 1 of hte 3 index points it had lost in the overnight markets yesterday… But it was sold, and Chuck thinks that the fact that it got sold was HUGE to investors and traders that want to get back into the water… N. Korea does their own version of dedollarization… And Chuck is not happy that the war in Ukraine could see escalation… And finally, China’s 1st QTR GDP was 4.5%…
Before I head to the Big Finish today, I have a funny for you… This link will take you to a page and on the page will be a short video that you should click on to see how Banking is done… here’s the link; Watch “how the banking system works three stooges the 20 bucks i owe you” – LewRockwell
For What It’s Worth… I found this on Bloomberg, and its’ written by Stephen Jen, someone that I used to read his stuff all the time, but in recent times he had evaporated… It’s about the dedollarization going on around the world, that a lot of analysts are ignoring… And it can be found here: De-Dollarization Is Happening at a ‘Stunning’ Pace, Jen Says – Bloomberg
Or, here’s your snippet: “The dollar is losing its reserve status at a faster pace than generally accepted as many analysts have failed to account for last year’s wild exchange rate moves, according to Stephen Jen.
The greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions, Jen and his Eurizon SLJ Capital Ltd. colleague Joana Freire wrote in a note. Adjusting for exchange rate movements, the dollar has lost about 11% of its market share since 2016 and double that amount since 2008, they said.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions,” Jen and Freire wrote. “Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies from the so-called Global South, they said.
Jen is the former Morgan Stanley currency guru who coined the dollar smile theory.
Last year, Bloomberg’s gauge of the greenback surged as much as 16% as the conflict helped fuel a rise in global inflation that triggered widespread interest rate hikes which sank bond and currency markets alike. It finished the year up 6%.
Biden’s Dollar Weaponization Supercharges Hunt for Alternatives
Smaller nations are experimenting with de-dollarization while China and India are pushing to internationalize their currencies for trade settlement after the US and Europe cut Russian banks from the global financial messaging system known as SWIFT. There’s also concern the dollar may become a permanent political tool, or be used as a form of economic statecraft to put extra pressure on countries to enforce sanctions that they may disagree with.”
Chuck Again… Well, I think I was way ahead of the crowd in saying that the dedollarization would eventually come back to hurt the dollar… The pace this is going is unreal though…
Market Prices 4/19/2023: American Style: A$ .6699, kiwi .6184, C$ .7443, euro 1.0941, sterling 1.2429, Swiss $1.1117, European Style: rand 18.2847, krone 10.5554, SEK 10.3311, forint 345.44, zloty 4.2467, koruna 21.4523, RUB 81.62, yen 134.85, sing 1.3371, HKD 7.8499, INR 82.23, China 6.8948, peso 18.13, BRL 4.9855, BBDXY 1,224.07, Dollar Index 102.03, OIL $79.40, 10-year 3.62%, Silver $24.75, Platinum $1,060.00, Palladium $1,616.00, Copper $4.04, and Gold… $1,972.70
That’s it for today, and this week, sorry about no Pfennig tomorrow, but I’ve got to be at the hospital bright and early in the morning… And then Friday I go right back there to see my oncologist, who hasn’t seen me for 4 months, and to tell you the truth, I miss her! Well, our Blues are playing Golf, instead of hockey, our Cardinals have started the year with a dud, but…. We still have our St Louis City SC team that’s in first place, and has scored the most goals of al lthe teams in the league, while being an expansion team! Day game at Busch Stadium today, and I’m not going! UGH! I tried, but couldn’t get any of my working friends to play hooky to go to the game with me… 🙁 It’s tough being the only retired guy that wants to go to day games! We’re in for a cold front to move through this weekend, and I won’t like it, but I’ll have to wear long pants! And sweatshirts! with hoods! YUCK! The Stealers Wheel takes us to the finish line today with their great 70’s song: Stuck In the Middle With You… I hope you have a Wonderful Wednesday today, and please, pretty please with sugar on top, Be Good To Yourself!
Chuck Butler