Shooting Holes In The Power Grid…

December 6, 2022

* Currencies & metals get sold on Monday…

* The Exchange Stabilization Fund Gets a workout on Monday… 

Good Day… And a Tom Terrific Tuesday to you! Woes continue for our Blues… UGH! Another day, and another day toward being free of this nasty cold. I guess that since I have no immune system any longer after 15 years of chemo, that when I get a cold, it’s nastier than it is for a healthy person… So, there’s that…  At least I’m not sleeping throughout the day and night any longer…  The money the MLB ballplayers are making in free agency is crazy money… But as long as we continue to buy tickets to games, that won’t change… I don’t think having $300 Million would change me, but… I’m sure it would… I’m just saying… Sam Whitmore greets me this morning with his version of the song: I Heard The Bells On Christmas Day…

Well, proving once again that a trend is not a One Way Street, yesterday, the dollar rallied all day, and by the end of the day the BBDXY had gained 10 index points, and the perky look the currencies had on Friday, was no longer on their respective faces, and instead there was a frown… The way the dollar took off suddenly yesterday morning, it looked to me like the Plunge Protection Team (PPT) had put some of their treasure chest of money to use, buying dollars and selling whatever currency they had on hand. At some point the Exchange Stabilization Fund will run out of money… I can’t wait for that to happen, because it has been used as a prop for the dollar, instead of letting the dollar trade on its own merit.. But that’s the way the cookie crumbles these days with every market being manipulated…

And some of that dollar buying was used to fund the price manipulators who sold Gold & Silver short in the paper market, causing Gold to lose $28 on the day, and Silver to lose 86-cents!  UGH! Just when you thought it was safe to get back into the water, along comes a shark fin, in the water… EEEEEKKKK!!

Gold closed the day at $1,770.10, and Silver closed at $22.34… The price of Oil got slammed yesterday, losing $4 on the day, and ending up trading with a $77 handle. Bonds saw some selling, as the yield on the 10-year Treasury rose a few bps… 

There was no rhyme or reason that the dollar got bought yesterday, which fuels my position that the PPT was in propping up the dollar… So, now it’s back to the drawing board for the non-dollar traders, who thought coming into this week that it was going to be all sunshine and balloons…

In the overnight markets last night… The dollar slipped a bit, with the BBDXY losing 2+ index points and sits at 1,263 as we start the day. The euro has climbed back above 1.05, and is taking all the other currencies along for the ride. Gold is up $9 to start the day today, and Silver is up 18-cents. The price of Oil has slipped another $2 bucks and trades with a $75 handle this morning. I read a piece this morning that talked about how Gold saw profit taking yesterday… Really?  To move it downward by $28? I doubt it seriously… This was the work of the PPT… I’m so sure of that, I could be moved to place a wager on that, but then I’m not a betting kind of guy… so we move on…

I ran out of time and space to give you any more things that were on my mind that could lead to disaster, chaos, and other forms of disaster… So, I’ll continue with my work here… Did you hear about? “On November 15, the Pentagon revealed that it had failed yet another audit. The Defense Department only managed to account for 39 percent of its $3.5 trillion in assets, leaving more than $2.1 trillion unaccounted for.

The news came as no surprise to seasoned Pentagon watchers. Indeed, the Defense Department is the only U.S. government agency to have never passed a comprehensive audit. But what did raise some eyebrows was the fact that the Pentagon made almost no progress in this year’s bookkeeping, unlike the slow progress it made over the prior 4 years. Of the 27 areas investigated, only seven earned a clean bill of financial health, which Pentagon Comptroller Mike McCord described as “basically the same picture as last year.”

This accounting disaster echoes the Pentagon’s bad math. It is very bad at estimating the cost of weapons programs.”

Chuck again… How on earth have we allowed this to go on and on year after year, decade after decade? And here’s the thing that gets me, on this… They won’t allow the Fed to be audited… Doesn’t that make you want to question what’s going on at the Fed? 

Or, did you hear about:? “With no suspects or motive announced, the FBI is joining the investigation into power outages in a North Carolina county believed to have been caused by “intentional” and “targeted” attacks on substations that left around 40,000 customers in the dark Saturday night, prompting a curfew and emergency declaration.

The mass outage in Moore County turned into a criminal investigation when responding utility crews found signs of potential vandalism of equipment at different sites – including two substations that had been damaged by gunfire, according to the Moore County Sheriff’s Office.”

Chuck again… Well, it sure is getting a little late in the season for this to happen… I got this blurb from CNN.com

And finally, I do believe I’ve listed everything that had me concerned this past weekend… But this news is really concerning: “Average hourly earnings picked up by 5.1 percent in the year through June, moderating slightly from 5.3 percent in the year through May. Economists in a Bloomberg survey had expected a slightly bigger cool-down, to 5 percent.”

Chuck again… no, that’s not the concerning part… What I’m concerned about is that while everyone pointed out how great it was that wages were rising, they forgot to mention that they are still below the inflation rate… So, you may bring home more in the way of wages, but those wages are worth less all the time with inflation even if I use the watered down CPI at 7.7%…  Go on, do the math… inflation is still higher than wages…

The Fed heads are on sabbatical  this week as they get blocked out of speaking the week before the Fed Heads meet to discuss rates… And that will happen next Wednesday.  Speaking of next Wednesday, I suspect that the Fed Heads will hike rates 50 Basis Points, but I’m still holding out hope for a 75 Basis Points hike…  That will bring their internal rate to 4.5%, still far below inflation, so there’s still more work to do for the Fed Heads… And I hope Chairman Powell, will be just as adamant about making sure the markets are not pricing in a pivot this time like he did 5 weeks ago…

The U.S. Data Cupboard yesterday, had Factory Orders and Capital equipment Orders for Rocktober. Both were better in Rocktober than they were in Sept, with Factory Orders gaining 1%… And CAPEX gaining .6%…  Today’s Data Cupboard will have just have the Trade Deficit for us… Tomorrow’s Data Cupboard will be the datapalooza day… So, get ready, get set, and here comes the cooked, massaged and rigged Gov’t economic data reports for you tomorrow…

To recap… The dollar rebounded yesterday, big time… The BBDXY gained 10 index points, Gold lost $28, and Oil lost $4, so our Monday didn’t start the week off right, now did it?  Chuck’s concerned about people and their wages not keeping up with inflation… Somebody shot holes in the N.C. substation, and cause 40,000 people to be without water and power…   And Chuck is still leaving the light on for a 75 Basis Points hike next week although he’s consigned to 50… UGH!

For What It’s Worth… This article is about the honker, that I talked yesterday… It comes to me via Reuters and it can be found here: Improbable bets on break of Hong Kong dollar peg adding up | Reuters

Or, here’s your snippet: “It’s what is known in the markets as a “tail risk”: a highly unlikely scenario in which Hong Kong’s currency peg suddenly snaps. Yet market pricing suggests bets on such a shock are building in the hedge fund world, and some traders say it makes a lot of sense.

Billionaire money manager Bill Ackman went public last month with his wager that the days of the Hong Kong dollar’s 39-year-old peg to the U.S. dollar are numbered.

Ripples in the derivatives market imply he is not alone, as “macro” trading – or betting on big global shifts – swings back into vogue and the prospect of reaping a huge reward for relatively little risk revives a perennially unsuccessful trade.

Most fundamental analysts say such bets are foolish, pointing to the city’s still massive reserves and China’s backing.

But they can be relatively cheap and even profitable regardless of the peg staying intact, and it buys insurance against unlikely but not impossible chains of events, such as a sudden blow-up in China, devaluation or a geopolitical chill.

“For me, the Hong Kong dollar peg is like a delayed, or lagging bet against China,” said Diego Parrilla, who runs Quadriga Igneo, a $240 million fund designed to profit from market turmoil.

“You are taking advantage of the extreme complacency of the market,” he said. “The downside is limited to the premium spent…I’m risking very little and can make a lot.”

A measure of the spread, or skew, between puts and calls in the options market has hit its widest in about three years in favour of U.S. dollar calls, suggesting bets against the Hong Kong dollar are becoming a little more crowded.

The Hong Kong dollar has been pegged in a tight band between 7.75 and 7.85 per greenback for nearly four decades. Its stability and fungibility have been major foundations for Hong Kong’s success as a financial centre and a hub for money moving into and out of China.

China rarely comments on the peg, but in 2014 its cabinet said the government would “firmly support” Hong Kong in maintaining the peg and the stability of the city. The Hong Kong Monetary Authority (HKMA) says it has “no need and no intention” to change the system, and sufficient reserves to defend the peg.

Chuck again… Yes, this has gone on before several times… And the peg has aways prevailed… But there comes a time when all pegs come to an end, and maybe, just maybe this is that tie for the honker… I guess well have to wait-n-see…

Market Prices 12/6/2002: American Style: A$ .6737, kiwi .6346, C$ .7345, euro 1.0545, sterling 1.2231, Swiss $1.0647, European Style: rand 17.2928, krone 9.9202, SEK 10.3317, forint 393.97, zloty 4.4648, koruna 23.1024, RUB 63.08, yen 136.10, sing 1.3554, HKD 7.7782, INR 82.61, China 6.9882, peso 19.63, BRL 5.2346, BBDXY 1,263.98, Dollar Index 105.03, Oil $75.76, 10-year 3.55%, Silver $23.53, Platinum $1,000.00, Palladium $1,884.00, Copper $3.79, and Gold… $1,779.59

That’s it for today… Another strange and quiet day here at my house… I think my wife is just leaving me alone to get rest and not make noise…  I’m plum out of books to read… I’ve read everything that I have here… OK… I’ve got some news for you… You know that the week before Christmas and Christmas week, I usually take off for my annual winter vacation.  But this year, I’ll only be gone for Christmas week. To start the year 2023, I’m going to be gone the first 10 days of January…  I’ll be going where it’s even warmer than it is in S Florida! YAHOO! I might write you every now and then during that time, if something comes up that needs attention. I’ll take my laptop with me, but I truly hope to not even open it up!  So, there, that’s the news, I know that’ll be different this year, but it is what it is…  Jack Jezzro takes us to the finish line today with his bossa nova beat version of the song: Home For The Holidays…  I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

The Honker Tests The Peg…

December 5, 2022

*Currencies & metals end last week in rally mode

* A huge investment fund is limiting withdrawals… Uh-Oh! 

Good Day… And a Marvelous Monday to you! And welcome to December… One of my fave months even if it is colder than… well it’s cold. The U.S. lost their 2nd round game to the Netherlands on Saturday… Too many opportunities wasted, but… The U.S. was the youngest team in the tournament, which means most of these players will be back in 4 years… The team played with a lot of heart and gumption in my opinion, but in the end it was their youth that did them in… I grew up in S. St. Louis, where everyone played soccer, and I was ok at the sport, but I liked football, baseball and basketball much better. Oliver Jones playing is piano greets me this morning with his version of the song: Have yourself A Merry Little Christmas…

I want to thank each and every dear reader that sent me a note last week, after I was unable to answer the bell last week… I’ve had pneumonia a couple of times in the past, and this was very close to being just that. I was sent to the basement to rest, and rest I did, sleeping Wednesday, and Thursday all day, only waking up a couple of times each day and night. I just can’t shake this cough, and it drives me crazy… But it’s only been 1 week now, so another week and I should be good to go!

It never fails that I get some kind of cold, this time of year…I used to be the Santa at my kids’ school, and after having all those kids on my lap each year, I would come down with something. I haven’t played Santa for many years now, but I still come down with something this time each year. I think it’s my body telling me that it doesn’t want to be here where it’s cold… HA!

Well, the dollar sure doesn’t look as strong as it did at the beginning of November that’s for sure… The dollar’s gain was over 10%, but now sits at 5.66% this year, and by the time this month is over, it might not even show a gain! The BBDXY dropped over 22 index points as the week went on last week. The euro has climbed back above the 1.05 figure and sterling trades with a 1.23 handle this morning. The Aussie an kiwi dollars are both looking very perky, a5 68 and 64-cents respectively… So, hold on to your currencies for now, because the dollar is in trouble…

Gold gained $34 on Thursday last week, and Silver gained  56-cents, and then on Friday Gold gave back $5.70, but Silver continued to gain adding another 34-cents on Friday.  Gold had made it to above $1,800 on Thursday, but settled for a figure of $1,798 on Friday. Silver closed the week at $23.20… A nice week for the two metals that most of you own. And if you don’t, well… What can I say?  Like I said last week, you can lead a horse to water, but, you can’t make it drink the water. I know, I know, it’s been a difficult year for Gold, with all the rate hikes by the Fed Heads, but that’s all about to change… Gold’s next line of resistance is $1,850, if Gold can settle above that figure, then it’s Kay Bar The Door!  There’ll be no looking back, full steam ahead, and all that and more.. .Of course that’s my opinion, and I could end up being wrong…

The OPEC members met this past weekend, and kept their lower production levels the same… That kept the price of Oil steady with an $80 handle. And Bonds are on a roll… Having been the worst bond market in over 20 years so far this year, that all changed in the last 10 days, and buyers have been flocking to the 10-year Treasury Bond, who’s yield has dropped to 3.53% It’s still a far cry from the low of 5/6ths, last year… But still better than when it was trading over 4.20%, a month or so ago.

There are still some people out there in La-La land thinking the Fed Heads are going to pivot… and reverse their rate hikes to save the stock market, and bonds… I just don’t see how they can think that any longer, especially after Fed Chairman, Powell, made it perfectly clear that this was not the time to pivot… Well, I learned early on in life that “you can believe what you want to believe, as long you don’t expect me to believe it” You know, You take the high road and I’ll take the low road, and I’ll get to Scotland before you!

In the overnight markets last night: The dollar started off the evening session getting sold, and the BBDXY was down 5 index points, but as the night went along, the dollar rallied, and we start today with it being flat as a pancake (Head East) with its Friday close of 1,256… There was some drifting downward of the currencies though, and they don’t look so perky this morning. Gold starts the week down $4… The best performer overnight is the Chinese renminbi… Wait, What?  Yes, the BIG NEWS overnight is that China has actually pivoted on the zero covid stance, and Asia and the rest of the world is jumping with joy. The renminbi is trading this morning with a 6 handle, for the first time in month of Sundays. And like I explained many years ago, if the renminbi is in rally mode, so too is the Singapore dollar.

The price of Oil is up a buck this morning, and trades with an $81 handle, and bonds keep getting bought… You know it occurred to me over the weekend that a lot of this buying of the 10-year Treasury could actually be safe haven buying… People are scared right now, and when they are scared they flock to Gold, Swiss francs, and Treasuries… To me I find it embarrassing to see that people are just now getting scared… This mess has been building a long time now, it just didn’t become a mess overnight. I guess I didn’t yell at the walls loud enough! My bad…

There’s so much that’s going on I’ll never get to all of it today… But I’ll try!   First of all have you heard about this? The latest to be hit with a surge in investor demand for their money back is the Blackstone Real Estate Income Trust (BREIT). Unlike most REITs, BREIT doesn’t trade on a stock exchange. Investors have to ask the trust to buy back their shares when they want their cash back.

According to an announcement posted at the Blackstone website, it has begun to limit withdrawals. In November, investors only received 43 percent of the withdrawals they requested.”

The folks at Wall Street On Parade told me that news, and I thought, “Oh-no!” The fallout from the FTX collapse is starting to spread around the markets… And now there’s another Crypto exchange having problems… Genesis had a large sum of money at FTX, and now that’s lost, their liquidity is drying up fast…

OK.. or did you hear about this: “TD Securities announced Thursday that it was stopped out of its tactical short silver position. The bank said it is booking a 14% loss after “an epic positioning squeeze contributed to a +25% rally from the October lows.”

TD Securities was short silver as it expected that rising U.S. interest rates combined with the growing threat of a recessio n would significantly weigh on the precious metal.” From the good folks at GATA…

Chuck again… I can’t tell you how happy I was to hear this news, that a short paper holder got stopped out of their short position and had to take a loss… It reminded me of my old margin days, and having to close out accounts to cover the investor’s short position.  I wonder if they learned their lesson , TD securities that is… I doubt it.. but there won’t be any levels to stop at going higher for Silver to give them any idea that Silver’s rally is over…

Or, did you hear that the Brics countries have developed their own card / payment system that will alleviate the use the dollar when using it?  This is HUGE folks… I’ve been pointing out how the BRICS have come together and joined their countries like a European Union, but seeing the problems with the European Union that way it was organized, will allow the BRICS to do it better, and they’re on the right path… They have the most people, they have the biggest treasure chests of reserves, the have the most Gold, and pretty soon, they’ll be a tough row to hoe, for the dollar to compete with… 

In the U.S. Data Cupboard last week we had two differing reports on labor… First on Thursday, the Continuing Jobs Claims exploded higher in November… And then on Friday we had a larger than expected jobs created number… So, what is it? Oh, I know… call on me, Mr. Kotter, Call on me! You see, when these people lose their jobs, and sign up for unemployment, they are very picky about the kind of job they want… They were told in college that they would be the President of a large Company, or the leader of a strong Union, or a Bond Trader on Wall Street, or a barrister… But you’re not going to be a barista!

And I don’t blame you… But C’mon, President of a large Company already? 

One more thing that’s going on that needs to be addressed and that is the trading in the Hong Kong Dollar (HKD) or the honker as traders used to refer to it. The honker has really pushed the envelope on its peg to the dollar recently, and trades this morning at the far end of the peg’s band, and looks like traders will test the peg soon… Each day in the past month, the honker is a little bit stronger, and to me that’s traders testing the water, to see how far they can take the honker without being slammed by the Monetary Authority… So far… so good…   We’ll have to keep an eye on the honker for signs it will be forced to drop the peg…  Very interesting indeed! 

Last week’s Data Cupboard also told us the Manufacturing in the U.S. is now contracting…  The ISM (manufacturing index) fell below the 50 level at 49 in November, falling from 50.2… You may recall me telling last month that the number had been sliding in recent months reports, and that I fully expected it to fall below 50 in the next report… And it did, it did, I did see a putty tat!

There’s not much in this week’s Data Cupboard, so with little on the docket, the dollar is on its own this week, with no trumped up, goosed, and massaged reports to help it…

To recap… The dollar selling last week was harsh, and the BBDXY lost 22 index points to end the week. The dollar’s gain this year has dropped from over 10% to 5.66%, and Chuck thinks that by year end the dollar’s gain will be hanging on for dear life. Continuing Claim explode higher, at the same time so does job creation… something is awry there…  The BRICS are coming out with a payment system to compete with the dollar.. all in all it’s just another Brick in the wall!  TD Securities got stopped out of their short Silver paper trade, and Chuck is happy as a he can be about that news! 

For What It’s Worth…  Ok, since I brought it up this morning about any of the Gov’t’s reports being cooked, goosed and massaged, this is about one of those reports where something is very wrong, and we need an explanation.. and it can be found here: Something Is Rigged: Unexplained, Record 2.7 Million Jobs Gap Emerges In Broken Payrolls Report | ZeroHedge

Or, here’s your snippet:” A superficial take of today’s jobs report would note that both jobs and earnings “blew past expectations, flying in the face of Fed rate hikes”, and while that is accurate at the headline level, it couldn’t be further from the truth if one actually digs a little deeper in today’s jobs numbers.

Recall that back in August, September, and October we showed that a stark divergence had opened between the Household and Establishment surveys that comprise the monthly jobs report, and since March the former has been stagnant while the latter has been rising every single month. In addition to that, full-time jobs were plunging while part-time jobs were surging and the number of multiple-jobholders soared.

Fast forward to today when the inconsistencies not only continue to grow, but have become  downright grotesque.

Consider the following: the closely followed Establishment survey came in above expectations at 263K, above the 200K expected – a record 7th consecutive beat vs expectations –  and down modestly from last month’s upward revised 284K… numbers which confirm that at a time when virtually every major tech company is announcing mass layoffs…

… the BLS has a single, laser-focused political agenda – not to spoil the political climate at a time when Democrats just lost control of the House as somehow both construction (+20K) and manufacturing (+14K) added jobs according to the BLS, when even ADP now reports that these two sectors combined shed more than 100,000 workers in November.

Alas, there is only so much the Department of Labor can hide under the rug because when looking at the abovementioned gap between the Household and Establishment surveys which we have been pounding the table on since the summer, it just blew out by a whopping 401K as a result of the 263K increase in the number of nonfarm payrolls (tracked by the Household survey) offset by a perplexing plunge in the number of people actually employed which tumbled by 138K (tracked by Household survey). Furthermore, as shown in the next chart, since March the number of employed workers has declined on 4 of the past 8 months, while the much more gamed nonfarm payrolls (goalseeked by the Establishment survey) have been up every single month.”

Chuck again… well that total gap has grown to 2.7 Million jobs… Sooner or later that big fat lie the BLS keeps telling is going to come back to haunt them… I hope in my lifetime so I can say, “neener, neener, neener, liar, liar your pants are on fire!

Market Prices 12/5/ 2022: American Style: A$ .6800, kiwi .6402, C$ .7450, euro 1.0554, sterling 1.2264, Swiss $1.0695, European Style: rand 17.2647, krone 9.7789, SEK 10.3057,  forint 388.80, zloty 4.7411, koruna 23.0740, RUB 62.23, yen 135.37, sing 1.3494, HKD 7.7578, INR 81.29, China 6.9570, peso 19.53, BRL 5.2194,  BBDXY 1,256.58,  Dollar Index 104.53,  Oil $81.83, 10-year 3.51%, Silver $23.01, Platinum $1,023.00, Palladium $2,910.00, Copper $3.77, and Gold… $1,794.68

That’s it for today… This weekend marked the 32nd anniversary of the day, that Iben Browning said a major earthquake would occur in the St. Louis area. Of course it didn’t happen, but, you should have seen all the disaster planning that had to be done by Companies. I was in charge of coming up with the disaster plan for the Bond Dept at Mark Twain Bank. It was quite the undertaking! Our Blues are back to losing games again… UGH! My beloved Mizzou Tigers will play in the Gasparilla Bowl in Tampa on Dec. 23… And both the basketball teams of Mizzou and St. Louis U, won their respective games this past weekend, so onward and upward! I’m still having coughing fits this morning, so I haven’t been able to sing along with the Christmas music that’s playing… The Stephen Kummer Trio is playing their version of: Baby It’s Cold Outside… I think I told you this in prior years, but the all-time best version of that song was sung by Ann Margaret and Al Hirt… OK, I hope you have a Marvelous Monday today, and please Be Good To Yourself!

 

Chuck Butler

Another Chance To Do The Right Thing…

November 30, 2022

* currencies & metals look better these days… 

* Chuck dissects the Black Friday sales numbers

Good Day… And a Wonderful Wednesday to you! U.S.A! U.S.A! I could hear the chant of the fans in Qatar on the TV yesterday, when the U.S. beat Iran to advance to the 2nd and knockout round of the World Cup… The U.S. team had to score at least one goal, and they did with the Captain America scoring it the 1st half…I thought the U.S played their best game yesterday, and now they’ll have to play better as they will face the Netherlands on Saturday morning… I guess it will be a Bloody Mary Morning on Saturday… The USA baseball team which will play games this spring, got a commitment from Adam Wainwright to pitch for the U.S. I sure hope he’s on when he pitches this spring…  The Stephen Kummer Trio greets me this morning with their song: I’ve Got My Love To Keep Me Warm

Well, our Tom Terrific Tuesday was off to a good start yesterday for the non-dollar investors, with the BBDXY down 5 index points to start the day… But that didn’t last, and the dollar rallied throughout the day to end up only down 1 index point at 1,279…  The currencies were about to take off on a upward orbit yesterday, but then they couldn’t get off the ground. Gold did find a way to add to hold onto its early morning gain of $9 and ended the day at $1,760.80, while Silver rallied 31-cents to close at $21.33..  The price of Oil continued to rebound and traded all day in the $78 range.. .It seems the Oil producing countries are meeting again this week, and it is highly expected that they will once again announce a production cut, and that’s why Oil has rebound a bit.

In The overnight markets last night… There wasn’t much movement in the dollar or the metals. However, this morning the currencies are taking off, and the metals are following. Platinum alone is up $36 this morning, Gold is up a few bucks, and Silver is up 43-cents. Oil has really taken the rumors of a another production cut coming from the OPEC upcoming meeting, and trades with an $80 handle this morning…

Here we go again! Mom! He’s doing it again! What I hear you asking? Ahhhh grasshopper, it’s that time once again to raise the debt ceiling… It’s either do that, or default… The Debt ceiling has been raised 78 times since 1960. The Debt Ceiling has NEVER been reduced…  Usually, you get all the hand wringing and sweaty foreheads of the Congress people on TV talking about it, but in the end, it’s always been raised, so there’s no worries on a default this time… Move along, these are not the droids we’re looking for…

I really think that this is yet another chance to do the right thing for the lawmakers… they could stop their cronyism,  payouts on bribes, I mean to voters, and all the money spent on wars, and cut the deficit… But they won’t because those things don’t get them reelected… It’s all about retaining the power… I shake my head in disgust. 

I was doing some thinking about the recent Black Friday sales that were supposed to be good, and thought well, no wonder sales receipts are up this year from last year, this year things cost more due to inflation, and thought, why would people be all excited about increased sales that aren’t better than the inflation rate? I started to get into this and then I read a piece from James Rickards at the dailyreckoning.com site, and thought, he does it way better than I do, so here’s Jim: “Black Friday’s sales set a new record this year, up 2.3% over 2021. Thanksgiving online sales were also up 2.9%. So don’t listen to any gloom and doom talk about a recession. Just look at the numbers.

That’s what they’ll tell you. Well, here’s what they won’t tell you:

All of those sales figures are nominal. In other words, they don’t account for inflation.

If an item costs 10% more this year than it did last year, even a decrease in sales numbers can still yield a nominal increase in final sales numbers.

But the actual number of sales would be down from the previous year. The final figures are simply masked because of the inflation.

If you adjust this year’s nominal sales numbers for inflation, you’ll discover that real sales are down about 5%.

That figure is consistent with recession. Of course, that doesn’t fit the mainstream narrative, but that doesn’t change the facts.”

Chuck again, well that’s exactly what I would have said… (right, and my first wife was a young Elizabeth Taylor! )

This letter will be going out a little later than usual this morning… I dog ate my homework, I lost it on the way to school, I gave it to you already… You know, all the excuses for being late with homework, could be used, but, in the end. I just couldn’t answer the bell this morning… No excuses… sure, I could have blamed Technical Difficulties, as they have been an often occurrence, but, I’m a big boy, I’ll take the lumps for being a lazy, no good, account of a person that needed to sleep…  And once this letter is out the door, that’s exactly where I’ll return…

I had a dear reader send me a note yesterday, asking me that if everyone is using credit cards, and venmo, and what zelle, what difference is that to having digital currencies, since everyone has shunned cash?

I don’t want to get into a long discussion about digital currencies and how they will remove all privacy that you have regarding what you buy, and how much you spend, and could very well be the excuse the Gov’t uses to control you and keep you from doing the things you love to do…  No, I won’t do that this morning, I’ve don’t that before, so if you really need it, go back in the Pfennig archives and find it at www.dailypfennig.com 

I was watching a stupid TV show yesterday, and the parent was all upset because he couldn’t figure out how to Tik Tok…  And that brought my mind back to something that good friend, Dennis Miller, wrote a few weeks ago, take it away Dennis: “We are a generation that:

  • spent all their free time in the streets with their friends.
  • played hide and seek when dark.
  • had parents who were there.
  • found, collected, washed & returned empty bottles to the local shop for a few pennies each, then bought a candy bar with the money.
  • played board games and cards on rainy days.”

Chuck again… You know if you don’t already read Dennis’ letter, you should go there and sign up, you can find him at www.milleronthemoney.com

The U.S. Data Cupboard today finally has something for us… The 1st revision of 3rd QTR GDP will print today, along with Personal Income and Spending… We’ll also get 3 different Fed Heads on the speaking circuit… To finish it all off today, we’ll see the latest Job Openings and Job Quits numbers… The great resignation continues, and that will be evident in the plus 4 Million jobs quits number…

To recap… The dollar fought back yesterday to end up down only 1 index point in the BBDXY, it had been down over 5 index points overnight. Gold found a way to gain $8 on the day, and Silver gained 29-cents. The dollar seems to be just holding on for dear life to me… I guess we’ll see where this takes us, eh?

For What It’s Worth… I found this in note that the good folks at GATA sent me, and followed the link and found this story to be quite interesting… It’s about an African country that is a HUGE producer of physical Gold, and how they plan to use Gold to buy Oil…And that article can be found here: Ghana in talks with Dubai refiner to barter gold for fuel (energyvoice.com)

Or, here’s your snippet: “Ghana is in talks with Emirates National Oil Co. (ENOC) for a barter arrangement that will enable the West African nation to buy fuel with gold.

The government reached a “tentative” agreement with the Dubai-based oil firm, said Kabiru Mahama, an economic adviser to Vice President Mahamudu Bawumia.

Ghana, Africa’s second-largest gold producer, last week ordered large mining companies to sell 20% of the metal they refine to the central bank from Jan. 1 as it builds up reserves of bullion to be used to import fuel and reduce demand for dollars after its currency plunged 57% this year.

“We’re open to any international oil-trading company that is interested,” Mahama said in a phone interview on Friday. “Starting next October, all our oil-product needs would be swapped for gold.”

Ghana is struggling to stabilise its economy and sees the barter system as a way to stem a slide in the cedi — the world’s worst performer among currencies tracked by Bloomberg. The weakening cedi is fuelling inflation and depleting the nation’s foreign-exchange reserves.

Dubai has a long association with the gold trade. While critics say that regulatory loopholes allow bullion used for money laundering and smuggled out of war zones to be traded in the city, Dubai’s commodities exchange has rejected those claims.

Gold trading was brought into the United Arab Emirates’s federally managed anti-money laundering reporting system last year.

“ENOC is interested in giving us refined oil for gold,” Steve Opata, head of financial markets at the Bank of Ghana, said in an interview on Monday. “Depending on what quantities they are committed to giving us, we will give them the equivalent in gold. This is a government-to-government program.”

Chuck again… Well… this is the first domino to fall outside of the Russia / China Oil for gold trade, that is bucking the agreement made in the 70’s to price all oil in dollars… If this works, then you’ll se other countries try it.. And the number of ways the dollar holds the crown of the reserve currency gets taken away… I’m just saying…

Metals pricing 11/30/ 2022: American Style: A$ .6729, kiwi .6239, C$ .7407, euro 1.0391, sterling 1.2013, Swiss $1.0540, European Style: rand 16.9082, krone 9.8268, SEK 10.5217, forint 392.96, zloty 4.4847, koruna 23.4136, RUB 61.03, yen 139,13, sing 1.3657, HKD 7.7984, INR 81.42, China 7.0800, peso 19.31, BRL 5.2923, BBDXY 1,275.05, Dollar Index 106.59, Oil $80.97, 10-year 3.76%, Silver $21.76, Platinum $1,038.00, Palladium $1.938.00, Copper $3.73, and Gold… $1,757.30

That’s it for today… My beloved Mizzou Tigers got word that their best receiver is entering the transfer portal.. I ‘ve got to say this here, and then see if it gets any traction… But in my opinion, if a player enters the transfer portal he has to sit out a year before playing for the team he transfers to… This whole transfer portal thing is getting out of hand… The grass isn’t always greener on the other side of the fence, and these young men need to know that. I just heard a song that featured a banjo… Just hearing that made me think of the late great Mogambo Guru… He loved to play his banjo and did so in bands around where he lived in S. Florida. I have bumper sticker displayed on my writing desk that has a picture of the Mogambo Guru, and says, “What Would Mogambo Guru Buy?  (Gold, Silver & Oil, moron!) The Mogambo always considered me a Junior Mogambo Guru Ranger.. .or JMR…  I’m still trying my best Mogambo, to shout to people about how crooked the Fed Heads are, I hope you still read me in heaven…   Ok… time to go! Dean Martin is crooning his version of the song: I’ve Got My Love To Keep Me Warm, to take us to the finish line today. I hope you have a Wonderful Wednesday, and please, pretty please with sugar on top, Be Good To Yourself!

Chuck Butler

 

 

Where Have All The Savings Gone?

November 29, 2022

* currencies & metals get sold on Monday

* How useful was QE? 

Good Day… And a Tom Terrific Tuesday to you! Man, are our Blues streaky? I think if you look the word, streaky, in the dictionary, there will be a picture of the Blue Note! The team just can’t figure out who they really are, but the good news is… It’s a long season! Back to the drawing board for the team, as they prepare to take the ice again tomorrow night. Well, today is supposed to kind-of alright, weather wise, but then it gets cold again… UGH! I just have about 32 days before I head south for the winter, so I have to rough it out until then… Beegie Adair greets me this morning with her version of the song: Snowfall…

Well, we started the week off yesterday morning with the dollar having a problem last week, but shrugging it off to return to kicking sand in the currencies and metals faces on Monday. The BBDXY gaines 8 index points on the day and ended the day at 1,280. The euro just can’t handle any prosperity that comes its way, and after climbing to 1.0450 to end the week, it dropped 1/2-cent yesterday. Gold lost $14 on the day to close at $ 1,742.10, and Silver lost 52-cents to close just above $21, at $21.02… The price of Oil wrapped a tourniquet around its bleeding, and found a way to rally $3 yesterday and end the day trading with a $77 handle.

And bonds got sold yesterday, well that is the 10-year Treasury got sold, and saw its yield rise to 3.71%… I had a dear read send me a note yesterday, that I’ll share a snippet of the note with you here: “beginning to think that the tables may have turned. We may be heading for a significant global slowdown. That would cool inflation and probably have central banks of the world back off on raising short term interest rates. It, therefore, may be that folks are buying the longer bonds figuring that locking in the current rates may be as good as it will get for some time. If we go deflationary because of a regression to the mean from all the money printing, the current long bond rates may look pretty good.”

Now, that, my friends is a well thought, intelligent response to my carping about people thinking rates have peaked… I thank, dear reader, Jim, for that note… I had just read a note yesterday about the global slowdown that the IMF had come out with a report on. Yes, but I do believe that the global slowdown will take much longer to come to realization, that it will take for the Fed and other Central Banks to slow their rate hikes, wanting to prove to the world that they too, can defeat inflation, just Paul Volcker did!

In The overnight markets last night… The dollar got sold… The BBDXY is down 5 index points to start the day today. I think the dollar bulls got slammed yesterday when St. Louis Fed President, James Bullard, repeated his statement about interest rates needed to be in the 5 to 7% range to tamp down inflation. He said that the markets are “too dovish”… Hey! At least he’s trying to get the message across to the markets, if they don’t want to listen to him, then fine… The old saying here about leading a horse to water, seems to fit, eh? The euro is still trying to recalibrate where it’s going. I read a report yesterday that talked about how the euro will not continue to gain on the dollar… Well, my friend, that’s wrong… as long as the dollar is getting sold, the euro will benefit, for it is the offset currency to the dollar…

Gold is up $9 in the early trading this morning, and Silver has added 14-cents to start the day to day, here in the U.S. Oil is up another buck to trade at $78 this morning, and bonds are bonds… 3.71% is the yield on the 10-year to start the day today.

OK, Well, last week we saw the dollar drift towards the end the week, and the previous week’s end saw the dollar get whacked! So, what’s up with that? I found this next bit on Bloomberg.com and I’ll let you read it before commenting… “Former bulls including JPMorgan Asset Management and Morgan Stanley say the era of dollar strength is ending as cooling prices spur markets to trim bets on further Federal Reserve tightening. That may spell buying opportunities for the currencies of Europe, Japan and emerging markets.

“Markets now have a better grasp of the Fed’s trajectory,” said Kerry Craig, a strategist in Melbourne at JPMorgan Asset, which oversees $2.5 trillion. “The dollar is no longer the straight, one-way buy we’ve seen this year. There’s room for currencies like the euro and yen to recover.”

Chuck again… Maybe they’re reading the Pfennig these days? Ha! Yes, I do believe that the shine has been taken off of the dollar, and now we have to go back and forth for awhile in trading before the next phase of revealing the dollar’s rot comes along…

OK, did you hear about the protests in China on their Zero Covid Policy? Here’s Reuters with the skinny on that; “Police patrolled the scenes of weekend protests in Shanghai and Beijing after crowds there and in other cities across China demonstrated against stringent COVID measures disrupting lives three years into the pandemic.” Whenever I hear the words “protest in China” my mind flashes back to the one Chinese man in China staring down Tank… I don’t believe that ended well… But I digress here, sorry

In a follow up to previous Pfennig talks about the potential Rail Strike, I saw this news yesterday regarding the POTUS… “Monday asked Congress to intervene and block a railroad strike before next month’s deadline in the stalled contract talks, following pressure by business groups on the stalled negotiations.

“Let me be clear: a rail shutdown would devastate our economy,” Biden said in a statement. “Without freight rail, many U.S. industries would shut down.”

Chuck again…. Yes, yes it would be devastating Mr POTUS… I’ve been trying to say that for a couple of months now, but finally someone decided to listen, and do something about this… I don’t like the Gov’t getting involved in stuff like this, or anything actually, but like this, I think I can get around my dislike to see it work for the people for once!

Geez Louise… Have you all received your personal property taxes for this year yet? I have to say that the State Gov’t of Missouri and Florida didn’t waste any time increasing their rates of taxes this year… Oh well, it is what it is… UGH!

Before I head to the Big Finish today, I wanted to mention something I saw on Yahoo Finance.com over the weekend, here’s the title to the article: The personal savings of Americans have plunged to a shockingly low $626 billion — from $4.85 trillion in 2020.

Chuck again… Now that’s some drawdown eh? Reaching for that credit card has been popular in spending numbers lately, and apparently then when the bill comes… Cash out the door… But run those numbers one more time in your head and see that this is going to end up in tears for many a consumer… I hope you’re not one… I don’t think you are, but I don’t know all the readers!  This article made me think of the 60’s folk song: Where have all the Flowers gone?  Instead, it’s: Where have all the savings gone? Long time passing… 

The U.S. Data Cupboard today, still is lacking real economic data. We will see the color of the latest Case/ Shiller Home Price Index (HPI), which has been on a downward spiral for months now, and I doubt September’s HPI will show a different path… We’ll also see the stupid Consumer Confidence report for November… Stocks are in a bear market rally so…

To recap… The dollar’s drifting last week was replaced with dollar buying starting Monday. The currencies & metals found themselves in the red for the day, along with bonds. Oil actually gained a few bucks on Monday! China protests fill the news wires… Chuck doesn’t think that will end up well, for anyone doing the protests in China… And American savings rates are plummeting…

For What It’s Worth… Ok, finally some real economic journalism, someone looking under the hood, and shouting out about the dolts and twits… This article is about how Quantitative Easing was NOT a good thing that the Gov’t will tell you it was and it can be found here: https://www.bloomberg.com/opinion/articles/2022-11-22/fed-s-qe-was-a-colossal-monetary-policy-mistake

Or, here’s your snippet: “The great quantitative easing experiment was a mistake. It’s time central banks acknowledge it for the failure it was and retire it from their policy arsenal as soon as they’re able.

Since the global financial crisis of 2008, an integral part of central banks’ play book in the US, the UK and the European Union has been QE — the practice of buying up long-term bonds and mortgage-backed securities. QE is supposed to work by lowering long-term interest rates, which boosts demand and increases lending and risk-taking.

There is little to show in terms of the economic benefits of QE, but there are plenty of costs. Now central banks find their hands tied as they try to curb inflation with interest rate increases and quantitative tightening, which means no more purchases of long-term bonds and mortgage-backed securities. But they’re finding that ending QE can itself be a threat to financial stability.

During the 2008 financial crisis, central banks were desperate to inject liquidity into the financial system. With the policy interest rate at zero, it needed to figure out another mechanism, so it bought long-term bonds and mortgage-backed securities, ballooning its balance sheet. That was supposed to be an emergency measure, but it went on for years. QE was followed by QE2 and then QE3 as the Fed became fearful that stopping would crash the bond markets.

Looking objectively at the evidence, it’s still not clear that all this bond buying ever did much for the economy.”

Chuck again… No not much for the economy in the long run… But it did fuel the “All Everything Bubble” and for that we must be thankful… NOT!

Market prices 11/29/2022: American Style: A$ .6695, kiwi .6217, C$ .7388, euro 1.0362, sterling 1.2012, Swiss $1.0506, European Style: rand 16.9955, krone 9.9686, SEK 10.0506, forint 393.57, zloty 4.5273, koruna 23.4991, RUB 61.10, yen 138.48, sing 1.3740, HKD 7.8107, INR 81.72, China 7.1696, peso 19.12, BRL 5.3097, BBDXY 1,275.71, Dollar Index 106.43, Oil $78.74, 10-year 3.71%, Silver $21.16,
Platinum $994.00, Palladium $1,848.00, Copper $3.66, and Gold… $1,751.63

That’s it for today… Strange day here yesterday, it was very quiet, and unlike the days last week leading up to Thanksgiving and afterward. I ran across an article in our local paper last night, that had a poll going for the best “weather songs” of all time… I could think of a few like: I can See Clearly Now, and Riding the Storm out, and Let it snow, Stormy weather, and others, so there are quite a few when you think about it… I’m very excited about November coming to an end tomorrow, the house will begin to look like its starting to look like Christmas, and I can turn the volume up on the Christmas music I play all the time… Kathy says no to Christmas music before Thanksgiving… So, I keep the volume turned down! I found out last week at the DR’s office that I had lost 9 more pounds from the previous month. I am now at the same weight I was after my second major cancer surgery in June of 2007… Now if I could only lose 50 more lbs! That’ll be like trying to run a marathon for me… But I’ll keep trying! Vince Guaraldi and his trio take us to the finish line today with their version of the song: Christmas Time Is Here…   I hope you have a Tom Terrific Tuesday today, and remember to Be Good To Yourself!

Chuck Butler

 

 

The CBDC’s Are Coming…

November 28, 2022

* The dollar starts the week drifting… 

* Sweden hikes rates! 

Good Day… And a Marvelous Monday to you! Well, did your Thanksgiving celebration turn out to be just wonderful? Mine did.. The food was scrumptious, the company was grand, and the house was full of conversation. You know me, and how much I treasure Traditions… And Thanksgiving dinner is a tradition that I hope the cancel culture never ruins… I still use my Bobby Flay method of slicing the turkeys, and I really enjoy doing that… My beloved Mizzou Tigers won their final game on Friday, VS rival Arkansas, and left them 6-6 for the year… without bonehead plays, and bad referring, the Tigers could have been 9-3… I guess that progress for the program, but still a long way from where I expect them to be! Vince Guaraldi and his trio greet me this morning with their version of the song: Christmas Time Is Here…

Well, I have to say that late last week, while traders were off filling their stomachs with stuffing, the dollar didn’t fare well overseas on Thursday, and in normal trading on Friday. The BBDXY lost 7 index points on Thursday and Friday, and once again it appears that the sentiment toward the dollar is about to change… We were here last week at this time, and it appeared to me that Plunge Protection Team and the Treasure chest of funds, were able to prolong the dollar’s demise.. But here we are again at the same fork in the road, what will it be this time, Boys?

Gold & Silver were both up on Wednesday and Thursday, and then gave back those gains on Friday. Gold ended the week down $6.30, at, $1,756.30. Silver ended the week down 7-cents, at $21.54… I was cleaning off my writing desk of old stuff, and on it were a lot of the sheets I use to record prices on, and I noticed that we finished 2021 with Gold above $1,800… So, Gold has some work to do if it’s going to show a gain for this year. The BBDXY is up over 100 index points this year… And while a couple of weeks ago, it was much larger than 100 points, I have this feeling that by the time year end gets here, we will be looking at the dollar giving back all or most of that gain…

The price of Oil continues to get taken to the woodshed on a daily basis, and ended the week trading with a $77 handle…And the 10-year? OMG, the 10-year’s yield has fallen to 3.69% at week’s end… I still don’t know who on earth is buying this bond, but, whoever it is, I feel for them right now, for like I’ve said over and over again, this is not the time to buy long bonds, right now…

In The overnight markets last night… Sweden’s Central Bank The Riksbank, hiked rates 75 Basis point to reach an internal rate of 2.5%… Swedish inflation is at 7.9%, so they too are fighting inflation with a pea shooter, but they did claim that they might have to move quicker to bring inflation back to 2%…

In other news last night… The dollar drifted a bit higher, Gold is down $3 this morning, and the poor price of Oil just continues to get beaten and taken to the woodshed. Oil trades with a $74 handle this morning, and all the weakness in the price of Oil is being blamed on China… Oh, I got a laugh this morning, when I read a news headline that said, “Goldman says China will end zero Covid early”… I thought to myself, now Lola always gets what she wants here in the U.S. , but I don’t know how far her charms will take her… But, that’s just like Lola thinking that she runs the world!

The yield on the 10-year Treasury bond, slipped further down last night and trades this morning with a 3.67%… I just sit here shaking my head in wonderment at this bond and how it’s getting bought…

On Wednesday last week we saw the color of the FOMC’s Meeting Minutes from their latest meeting, where they hiked rated 75 Basis Points. I had told you that the markets would be scouring the minutes to see if there were any hints about a Fed Pivot… Well, this is what I pulled from the Fed’s website about the minutes: “The minutes confirmed that reining in inflation remains the principal concern of the Fed. The uncertainty surrounding the Russia-Ukraine conflict will continue to add to the upside risk. While labor market conditions remain tight, there has been a softening in recent economic data, which is in line with the Fed’s expectations. Nonetheless, the path to restoring price stability is uncertain as monetary policy works with a lag, which will continue to dampen economic activity before inflation begins to wane.”

Chuck again, well, it doesn’t sound anything like a “pivot” to me! But then I didn’t go to Harvard, or Yale, or Stanford, etc. I’m just saying… You know those “boys” like to read something that’s not really there, and tell al the world what the Fed was saying… But not this time… But it still didn’t stop the bond buying… I’m screaming at the ceiling, Serenity Now!

Well, the Fed heads are conducting their test of their own CBDC (Central Bank Digital Currency), while India is putting theirs into play… It’s all coming to life folks… And just like when Igor screamed “It’s Alive”, when The Frankenstein Monster came to life, and then went on to menace the town. These digital currencies are here to stay, and play havoc with your personal info… And your personal life choices, but don’t let that get in the way of proving convenience… I certainly wouldn’t want to stand in the way of you not having to go to an ATM for cash…

Remember before there were ATM’s? Oh, the awful things we had to do to get cash in our pockets! I’m just saying…

Because, you see, when the tests are over, and the Gov’t decides that it’s time, that’s what they will sell you on the convenience of using digital currencies… They won’t mention that from that time on, they would be able to dictate to you what you buy? Where you spend your digits? And if you’re not spending them, would you like to have them taken away from you? And for all that convenience, the bank will then introduce new banking fees… Oh, and don’t think you can just close your account and move somewhere else… Well, I guess if your move it out of the country then OK, but if not, forgetaboutit… All banks will have similar fees…

I have not idea how I got on this thread this morning… I’ve explained this all before, now haven’t I?

OK, back to stuff that’s happening now… From what I read this past weekend, the Black Friday sales were thin, but spending was good… And that’s a good thing, as long as the spending is within a person’s budget… Reuters reported that “Thin crowds of inflation-weary consumers hunted for Black Friday deals at stores in big cities including New York, Los Angeles, Chicago and other locales, marking the start of a U.S. holiday shopping season crucial to retailers in an uncertain economy.

Many shoppers who opened their wallets said their purchases were strategic, not impulsive or splurges.”

The U.S. Data Cupboard this week gets started slowly, with little of real economic data coming in today or tomorrow, but then on Wednesday the datapalooza begins, and carries through to Friday, where the BLS’s jobs creation report will print. I know it’s only Monday, but I’m going out on a limb here, no worries it’s a big fat limb, and say that if the jobs report is strong this Friday, then it will be only because of the BLS additions after the surveys… There!

To recap… The week ended last week with a dud for the dollar, and Gold gave back what it had gained on Wednesday… Chuck is concerned about the dollar’s demise and how far the PPT will allow it to fall… We shall see… Sweden hiked rates 75 Basis Points last night, and moved their internal rate to 2.5%, which is still far behind their inflation rate which is at 7.9%! The FOMC Meeting Minutes were printed last week, and as far as Chuck can see, there were no hints at pivoting…

For What It’s Worth… I’ve talked about Matthew Piepenburg of Gold Switzerland before and used his writing in this space a few times…This one is a good one and talks about how Gold’s recent rise comes at the right time, and it can be found here:  https://www.dollarcollapse.com/matthew-piepenburg-golds-climb-amidst-wisdoms-decline/

Or, here’s your snippet: “As the latest headlines from the FTX implosion remind us yet again of a politicized and rigged market riddled with deception, gold’s climb becomes easier to foresee.

But first, a little philosophical musing…

Modern Policy: High Office, Low Wisdom
I have often referred to La Rochefoucauld’s maxim asserting the highest offices are rarely, if ever, held by the highest minds.

Nowhere has this been more apparent than among the halls of the physically impressive yet intellectually vacant Eccles Building on Constitution Ave in Washington DC, where a long string of Fed Chairs have been un-constitutionally distorting free market price discovery for over a century.

The media-ignored levels of open fraud and inflationary currency debasement which passes daily for monetary policy (namely monetizing trillions of sovereign debt with trillions of mouse-clicked Dollars) within the FOMC would be comical if not otherwise so tragic in its crippling ripple effect to the Main Street citizen.

From Greenspan to Powell, we have witnessed example after example of error after error and gaffe after gaffeon everything from mis-defining inflation narratives as “transitory” to re-defining a “recession” as non-recessionary.

And all this while the Fed (and its creative writing team at the BLS) simultaneously and deliberately fudges the math on everything from misreported CPI data to artificial U6 employment statistics.”

Chuck again… This article is longish, so click on the link above when you find that you have the time to devote to it… I find that when reading what Matthew writes, I can’t put it away easily.. I have to finish it! He’s got a great mind…

Market Prices 11/28/2022: American Style: A$ .6696, kiwi .6220, C$ .7443, euro 1.0469, sterling 1.2093, Swiss $1.0601, European Style: rand 17.1411, krone 9.9000, SEK 10.4113, forint 390.40, zloty 4.4816, koruna 23.1257, RUB 61.00, yen 138.43, sing 1.3734, HKD 7.8160, INR 81.66, China 7.1985, peso 19.32, BRL 5.4886, BBDXY 1,272.43, Dollar Index 105.52, Oil $74.06, 10-year 3.67%, Silver $21.37
Platinum $992.00, Palladium $1,843.00, Copper $3.63, and Gold… $1,753.77

That’s it for today… Well, hopefully this is a little shorter than usual, I found myself sitting at the laptop this morning, wonder what to write about that I haven’t already written about? Well, we’re getting down to the cheese that binds in College Football, after all the different league championship games this weekend, on Sunday the final four teams in the playoff will be announced… Then the teams selected will have 3 weeks to prepare… That seems to be a bit too much to me, but then there is the Christmas holiday there… Oh well, whatever! My beloved Mizzou Tigers will go bowling this year, hopefully somewhere where it’s warm! White Christmas with a Bossa Nova beat is taking us to the finish line today, as Jack Jezzro and friends, play… I like that Bossa Nova beat… And with that, I hope you have a Marvelous Monday today, and Please remember to Be Good To Yourself!

Chuck Butler

New Zealand Hikes Rates!

November 23, 2022

* currencies & metals gain little on Tuesday

* Adam Sandler drops by the Pfennig today… 

Good Day… And a Wonderful Wednesday to one and all! Well, I told you Monday in my brief, Pfennig that it would be the only letter of the week… But my eye settled down, I can see again… Just a reminder that I only have one eye, so when that one’s on the fritz, I am too! Went to see my Primary Care Physician yesterday, Blood sugar is good, cholesterol, is good, BP is wonderful, lungs were clear… He is always surprised to see me in such good spirits. The first time I ever say him, he walked into the exam room and the look of shock on his face was priceless. He told me that he had been reading my medical history, and had in his mind a broken old man, and instead he saw me smiling at him! I told him, see you can’t believe everything you read! HA! He also told me that he too had experienced the same head cold / sinus problem that I had… But thought I was nearing the end of the ailment… Jack Jezzro and friends, from his Bossa Nova Christmas album play: Let It Snow for me this morning… I love this CD…

The dollar didn’t do much yesterday, while I was being stuck twice because they couldn’t find a vein, OUCH! The BBDXY was up 2 index points at the end of the day. It’s pretty interesting that on a day after a big gain in the dollar that it can’t follow up on that. Hmmm… Gold found a way to gain $1.70 on the day and finish at $1,740.90, and Silver gained 23-cents to move back above $21, and finish at $21.17… The price of Oil had gone south by a large margin before yesterday… The price of Oil had fallen to $78, but recovered a bit yesterday ending the day at $81… And investors are still buying the 10-year thinking they are locking in 10-year high yields… I can’t help but think they are so wrong that they are almost right… I also can’t help but think that yields will go higher, as the Fed Heads continue to hike rates…

Speaking of hiking rates, The Reserve Bank of New Zealand (RBNZ) hiked their Official Cash Rate (OCR) 75 Basis Points last night, and brought their internal OCR to 4.25%… That’s higher than the U.S.’s internal rate of 4.00%… In the old days, that would have brought on huge swaps of bonds from Treasuries to Kiwi Gov’t Bonds… But those days are long gone… I was a part of those days on a bond trading desk… I loved every minute of it, well, except for my arguments with Neil… But those were far in between…

Kiwi did rally on the rate hike news, and it outperformed its kissin’ cousin across the Tasman, the A$… I’ve always held a special place in my heart for kiwi… Many years ago, I was new on the foreign bond trading desk, and I had noticed that kiwi was on the move, and mentioned it to the boys on the desk, and I got a lot of flack about how it was too small a nation to look into… Funny thing, years later, kiwi bonds were the largest holding of foreign bonds that we had… Eventually people get around to hearing me…

In the overnight markets last night, the dollar got sold, along with Oil… The BBDXY has lost 6 index points overnight, and the euro has climbed higher in the 103 handle. Oil lost $4 overnight and trades this morning with a $77 handle. Gold is up barely this morning adding $2 to its value, and Silver is up 20-cents in the early trading today… The big mover overnight was kiwi, with sterling coming in second place… While I like the fact that sterling is stronger, right now, I still can’t get past the idea that the country has a mountain of problems that are being overlooked right now… Oh well, C’est Le Vie…

In other news… Tomorrow is Thanksgiving, and I can’t begin to thank all the dear readers who sent me a note on Monday… I truly appreciated each and every one of them! In Pfennig tradition, here’s Adam Sandler

“ Turkey for me, turkey for you
Let’s eat the turkey in my big brown shoe
Love to eat the turkey at the table
I once saw a movie with Betty Grable

Eat that turkey all night long
50 million Elvis fans can’t be wrong
Turkey lurkey doo and turkey lurkey dap
I eat that turkey, then I take a nap”

I crack up watching and hearing him sing that song… Well, now the Christmas shows will begin… You’ll shoot your eye out kid! Elf, and dozens of others… Bing Crosby and Danny Kaye in White Christmas is a real good one too!

Today’s Data Cupboard will have the Fed Heads Meeting minutes, that the markets will go over with a fine tooth comb to see if there are any hints of a pivot… As adamant as Jay Powell was after the last meeting about this is not the time to pivot, I can’t believe there would be any hints on that, but you never know what those rascally varmints, I mean Fed Heads have to say… We’ll also see Durable and Capital Goods Orders for Rocktober… Both of these have been very weak lately… And with the beauty of being so late with the letter we get to see what the Durable Goods for Rocktober were… They were up a nice 1.0% in Rocktober, and Capital Goods were up .7%.. So, not so weak as previously… Hmmm…

Next week’s Data Cupboard won’t have anything of real economics for us until Wednesday, and then on Friday we’ll see the BLS jobs creation report… or The Jobs Jamboree as I like to call it.

Market Prices 11/23/2022: American Style: A$ .6694, kiwi .6213, C$ .7564, euro 1.0349, sterling 1.2015, Swiss 1.0578, European Style: rand 17.0514, krone 100082, SEK 10.5105, forint 396.31, zloty 4.5432, koruna 23.5409, RUB 60.84, yen 140.20, sing 1.3802, HKD 7.8175, INR 81.85, China 7.1610, peso 19.36, BRL 5.3773, BBDXY 1,278.72, Dollar Index 106.62, Oil $77.67, 10-year 3.71%, Silver $21.37, Platinum $993.00, Palladium $1,1956.00, Copper $3.71, and Gold… $1,743.60

That’s it for today…No FWIW today, I just wasn’t in the mood… But I’ll be back on Monday with a good one, I’m sure, as I’ll have 5 days to work on it! This is a good year, in that all 3 kids will be here, with their families…Andrew & Rachel alternate years with his family and her family… I said, just invite her family here! But noooo, that’s too logical! I rarely see Alex & Grace these days, as both are working full time jobs, and living their life, so it will be good to catch up with them… I need Christmas gifts ideas for the girls in the family… I’ll figure something out, no worries, I just always run into a roadblock with buying for girls… Again, thank you to all who sent me get well/ Happy Thanksgiving messages on Monday… That meant a lot to me, so thank you very much! Jack Jezzro’s Bossa Nova Christmas is still playing, so he’ll take us to the finish line today with his version of the song: Christmas Time Is Here… I hope you have a Wonderful Wednesday, and a Very Happy Thanksgiving tomorrow, and please Be Good To Yourself!

Chuck Butler

 

Turkey For Me, Turkey For You…

November 21, 2022

* currencies & metals get sold on Friday last week

* the dollar gets bought in the overnight markets last night

Good day… And A Marvelous Monday to you! OK, let me get this out of the say… First of all this will be the only Pfennig this week… Second, this will be a very stripped down version of the letter, because I’ve got a cold in my eye, and right now I can hardly focus on the screen to write… It’s making things very difficult for me to focus on, so with that, I’ll give you the Market prices and some thoughts on Thanksgiving and then sign off for the week… Kenny G greets me this morning with his version of the song: O Christmas Tree

Well, my hopes that the dollar’s strong run had come to an end, have been dashed… The dollar, although, not strongly, came back last week, and proved once again that with the funds of the Exchange Stabilization Fund behind it, the dollar can remain strong… The BBDXY only gained I index point on Friday, but at the end of the week it had gained 10 index points for the week, and put to bed all the thoughts that the strong dollar trend was over. Gold finished the week on a down note, and once again our hopes that Gold had turned the corner were dashed too… Gold ended the week down $9.50 at $1,752.50. Silver didn’t fare any better and ended the week at $21.05. The price of Oil has fallen out of bed, and ended the week at $80, while bonds continued to get bought with the 10-year’s yield ended the week at 3.82%…

Spoiler alert.. I just finished an interview for the Miller On The Money letter, regarding bonds… and this crazy idea that the Bond yields have peeked… So, for you that have subscribed to Dennis’ letter, look for that in your email box in the next week or so…

In the overnight markets last night, the dollar got bought like it was going out of style… The BBDXY is up 9 index points to start the day today, and the euro has dropped back to a 1.02 figure. Gold is also off by $8 this morning, and Silver had given back 34-cents to start the day/ week. It appears that this week, albeit shortened because of the Thanksgiving Holiday, will be all about the dollar… So batten down the hatches and forget about the markets this week… It’s time to give thanks…

Market Prices 11/21/2022: American Style: A$ .6621, kiwi .6113, C$ .7441, euro 1.0244, sterling 1.1808, Swiss $1.0436, European Style: rand 17.3570, krone 10.2524, SEK 10.7240, forint 399.55, zloty 4.5932, koruna 23.7338, RUB 60.88, yen 141.84, sing 1.3822, HKD 7.8055, INR 81.84, China 7.1662, peso 19.46, BRL 5.3089, BBDXY 1,291.20, Dollar Index 107.51, Oil $79.51, 10-year 3.82%, Silver $20.71,
Platinum $980.00, Palladium $1,907.00, Copper $3.59, and Gold… $1,742.50

That’s it for today and this week, sorry for the shortened letter today, I’m just having a dickens of a time trying to see what I’m writing this morning… I thought I was on the road to recovery, ugh! I go see my primary care doctor tomorrow, for all the things not connected to heart and cancer… And then we’ll head to Thanksgiving… I sent Dennis a note a week or so ago, when he asked me about what I’m thankful for…
And in it I said that I am thankful to the Good Lord for allowing me to live and be where with you all today… There’s a story that goes with that, but I don’t want to steal Dennis’ thunder! So, when we all gather on Thursday, make sure you go around the table and have each person say what they are thankful for, it’s a nice way to start your Thanksgiving meal…

I’m sitting here thinking about when I was a young man and would eat two Thanksgiving meals. One at my home and one at Kathy’s home.. I could put away some food back then, not knowing then, what it would do my weight in the future! So, eat up, but don’t overdo it… But most of all… Be Good To Yourself!

Chuck Butler

 

Michael Burry Says It’s Time To Buy Gold!

November 17, 2022

* Currencies & metals get sold in the overnight markets

* What are the BRICS up to?

Good Day… And a Tub Thumpin’ Thursday to one and all! Our Blues sure looked like the Blues of old last night, and didn’t revert to the losing status they had for 8 games. They beat the Blackhawks last night, which used to mean something, I’m not sure the intensity of the old rivalry is still there… Well, I have errors and omissions for you this morning.. First of all, right after I hit send yesterday, I received an email from a news outlet letting me know that it wasn’t Russian missiles, as earlier reported, but Ukrainian defense missiles that entered Poland, and killed two. In addition, I also erred on the City 1 soccer game, saying it was Thursday night, when it was actually Wednesday night! UGH! So, there… that’s my mea culpa, for you.. Beegie Adair and friends greet me this morning with their version of my favorite Christmas song: The Christmas Waltz

Man I don’t like that when what happened yesterday, happens… I try to get the letter out on time each day, barring technical problems, and health issues, and sometimes when I do, I then receive a notice of some kind that what I talked about had a different spin on it… UGH! Oh, well, no harm, no foul, we move on to play another day…

Gold lost $5.40 yesterday to end the day at $1,774.80, and Silver, which was up big in the early trading gave all those gains back and lost 9-cents to close the day at $21.54…. Those were small losses, but losses that these two should not be getting given all the geopolitical stuff going on, all the unknowns, and markets on shaky ground at best… I’m just saying…

The dollar didn’t move much yesterday, the BBDXY held the same handle of 1,274 throughout the day, and so there was little to no movement in the currencies. The euro fell back below the 1.04 figure, but the fact that it had rallied that quickly to that figure, remains impressive. Because of their rate situations, the Aussie and kiwi dollars remain well bid.. And that old’ Russian ruble, just shrugs off all the bad news it received about what the country is doing, and remains strong… Well, not strong, but stronger than it used to be, for sure!

I’m going to go to this right here and now, because it plays well in the sand with the thoughts on Russia… This si Dave Gonigam in his 5 Minute Forecast newsletter, “India is the world’s third-biggest oil consumer after America and China. Before Russia invaded Ukraine, India imported about 2% of its oil from Russia. Now it’s about 23%.

Now as you might recall, Washington and its Western allies hope to impose a harebrained “price cap” scheme on Russian oil effective Dec. 5 — aiming to limit Moscow’s oil revenue.
Clearly, India is in no mood to cooperate.

Enter Treasury Secretary Janet Yellen: Last Friday, she said India is welcome to continue buying Russian oil at whatever price it likes — as long as it doesn’t do so with Western insurance, financing or shipping.
Yes, India can probably make other arrangements — so Yellen’s threat is as toothless as the price-cap scheme is brainless.” – Dave Gonigam 5 Minute Forecast

I told you last week that I didn’t think traders and investors were taking the news that the Suadis had agreed to sell Oil in rubles, or any other currency of the BRICS… So that means all that oil that the Saudis are selling to India, is no longer priced in dollars…

Do you see what I see going on here? That the BRICS countries are getting countries to go along with them and not the Western NATO states… Us against them, it looks like to me, and I don’t like that one iota!

OK, onto last night in the overnight markets… Well, it appears that the brief selloff of the dollar was just that… brief. The dollar rallied overnight with the BBDXY Gaining 7 index points, the euro had fallen further back into the 1.03 handle, and the Aussie & kiwi dollars have given back some of their gains, as too have the krones, and yen of the world… It sure didn’t take long for the yen to get back to being on the skids… I told you last week or was it earlier this week? That I thought it ws too early to call for a change in the dollar’s strong trend, and that we needed to see what happened this week… Well, we’ve seen it… and it’s back the drawing board for those that want a week dollar trend…

Gold is getting sold in the early trading this morning and is down $12, as I write, and Silver has given back 54-cents! The price of Oil has slid further and trades this morning with an $83 handle… And someone somewhere, somehow is buying the 10-year Treasury, and the yield on the bond is slipping again, with it trading with 3.73% yield this morning.

I can’t rule out the PPT entering the markets stealth like to prop up the dollar this week, they do have a large treasure chest of currency in which to spend to prop up the dollar… So they have that going for them! 

Well, yesterday we saw the color of the Rocktober Retail Sales.. And the Rocktober Retail Sales did come in stronger than previous months, at 1.3% gain… But that’s not going move markets, as long as they recall that consumer debt is skyrocketing as evidenced in the credit card data I’ve been feeding you. And on top of that, Target says their profits will be lower… That’s because people are buying more stuff than they used to, they’re just paying more for it…Target sees price increases and passes them onto customers, no gain for them there… But the amount of retail sales goes up.. .Easy peasy…

I want to make sure everyone understands that point… Retail Sales were higher, because of higher prices that were paid for goods… period. And what makes it worse is the fact that the purchases were put on credit cards… Now, as long these folks pay their credit card balances each month, then there’s nothing wrong with that, but if they don’t… Well, that’s just like the U.S. gov’t and its annual budget deficits… They just get added to the previous deficit and pretty soon, you’re at an amount that’s going to be very difficult to pay, unless you win the lottery…

All right, I’ll get down from my soapbox now… I hate to tell those folks that believe they can build debts to the moon and the government will bail them out… There are no more bailouts coming… So, deal with it!

I told you earlier this week that our friends (NOT!) at OPEC were meeting to discuss further production cuts, and this news came to me from zerohedge.com: “OPEC revised down each of its 2022 and 2023 oil demand growth forecasts by 100,000 barrels per day (bpd) from last month’s estimates due to China’s still-strict Covid policy and economic challenges in Europe, the organization said in its Monthly Oil Market Report (MOMR) out on Monday.”

Chuck again.. Oh those Wiley veterans of Oil pricing, they sure are tricky aren’t they? At least someone out there in the world of trading things still understand supply and demand, eh?

The U.S. Data Cupboard today has the usual Tub Thumpin’ Thursday fare of weekly initial Jobless claims… I suspect that sooner or later we’ll begin to see all the layoffs from the Tech industries start to show up here… But then maybe not, for the gov’t sure know how to hide those things when it wants to… We will also see the Philly Fed Index (manufacturing in that region) which is normally looked at closely by the markets. Tomorrow’s Data Cupboard just has the Leading Indicators for Rocktober, of which the last couple of months had shown negative numbers…

To recap… The dollar index didn’t move much yesterday, but Gold lost ground, Silver lost ground, the euro lost ground, and Oil lost ground… I guess the losses were too small to show up in the index numbers… Chuck doesn’t think that Gold should taking any losses right now, given the geopolitical problems going on in the world, crunching inflation, shaky markets, and what ever else that’s out there! Chuck points out something that he thinks the markets are not paying attention to and that is Saudi Arabia buddying up with the BRICS… Something’s going on there, my spider sense is tingling…

For What It’s Worth… I love it wen great minds think alike… I’m referring to me of course, and Michael Burry, you know the guy from the Big Short? I know, I know, I’m stretching it calling myself a great mind, but I must be because Michael Burry is, and he’s saying the same things I’m saying about Gold right now! His comments can be found here: https://www.kitco.com/news/2022-11-16/-Big-Short-Michael-Burry-says-this-is-gold-s-time-cites-crypto-contagion.html

Or, here’s your snippet: “In a rare comment, “The Big Short” investor Michael Burry has weighed in on gold, stating that this is the time for the precious metal to rally because of the crypto contagion risk post-FTX collapse.

Burry, who runs the hedge fund Scion Asset Management, is known for spotting the mortgage crisis early and making a fortune against the U.S. housing bubble. In 2019, the investor also made millions by purchasing shares of GameStop, which was well before the Reddit frenzy took over the stock.

Burry rarely comments on gold, making this call much more unique for traders. According to him, the crypto chaos caused by the FTX saga sets the stage nicely for gold.

“Long thought that the time for gold would be when crypto scandals merge into contagion,” Burry said in a tweet that has since been deleted. Burry is known to delete his tweets shortly after posting them.

His Tuesday comment coincided with gold getting a lot of attention from investors after its impressive November gains — up nearly 8%. The move higher comes after seven months of consecutive losses. Analysts cite cooler inflation data, lower U.S. dollar, crypto risk, and a potential slowdown by the Federal Reserve as some of the main reasons behind the price gains.

At the time of writing, spot gold was trading at $1,776 an ounce.”

Chuck again… I don’t know about you, but I loved that movie the Big Short, because I was in the middle of all that and writing about it at the time…

Market Prices 11/17/ 2022: American Style: A$.6657, kiwi .6083, C$ .7472, euro 1.0338, sterling 1.1811, Swiss $1.0534, European Style: rand 17.4890, krone 10.1546, SEK 10.6240, forint 400.52, zloty 4.5496, koruna 23.5934, RUB 60.49, yen 140.04, sing 1.3772, HKD 7.8269, INR 81.64, China 7.1535, peso 19.44, BRL 5.4686, BBDXY 1,281.49, Dollar Index 106.76, Oil $83.79, 10-year 3.73%, Silver $21.00,
Platinum $994.00, Palladium $2,016.00, Copper $3.73, and Gold… $1,762.65

That’s it for today… Well, our Blues come home to play on home ice tonight after going on a road trip and winning all three games on the trip. The players were accompanied by the Moms for this trip, so, the boys didn’t want to disappoint their mamas… Well, I have just one more night, tonight, and tthen tomorrow to be here alone… I have to say that the week has gone by fast, well, that’s easy for me to say, given I slept most of that time… My beloved Mizzou Tigers play at home this Saturday, and hope to get back in the win column… The St. Louis U. Billikens basketball team is off to a great start! I doubt there are 25 better teams out there this year… I’ve long followed the Billikens Basketball team, all the way back to the time they were in the Missouri Valley Conf. and Harry Rodgers was the best player in the conference! They’ve gone through depressions of years, and fought back, they remind me of me… Jack Jezzro takes us to the finish line with a different sound this time he’s playing guitar to : Happy Holiday… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… And please Be Good To Yourself!

Chuck Butler

 

Russian Missiles Find Their Way Into Poland! Uh-Oh!

November 16, 2022

* currencies drift, Gold gains on Tuesday…

* Waller says markets have gotten ahead of themselves… 

 Good Day…And a Wonderful Wednesday to you! What happened yesterday and last night? I don’t know, because I slept most of the day yesterday, and then dozed off again at 7pm and slept through the night. I guess my body needed the rest, but that was a little too much I think! So, normally, I check things during the day and through the night, make notes about what I want to talk about, and then when I wake up the next day to write, it’s not like I have blank screen to work with… But not yesterday, so this morning, is a visit to the past, when I would write it all in the morning, meaning that I got to work at 5 am… That’s never going to happen like that again, trust me on that one! The Ramsey Lewis Trio greet me this morning with the toe tapping version of the song: Santa Claus Is Coming To Town… 

Well, at first glance this morning, I see that the dollar fell back from its early morning gain yesterday. I left you yesterday, with the BBDXY up 9 index points, but throughout the day, inch by inch, little chunks of the BBDXY were taken away and the index ended the day up only 4 Index points. Still up for the day, but you wouldn’t be able to tell that when looking at the currencies, as they seem to be trading in the same clothes as yesterday. Gold found a way to gain $7.60 on the day and end the day at $1,780.20. Silver, on the other hand, didn’t participate in Gold’s gains, and ever since Silver traded above 22-cents it has been sold… yesterday’s loss was 46-cents… I guess the short Silver paper trades were making their way into the Comex…

The price of Oil gained $2.50 yesterday, and ended the day with an $86 handle. Our friends, (NOT!) at OPEC announced that they are looking at further production cuts, and that news got Oil bubbling up through the ground, like Texas tea, no wait! This is no time to sing the Clampet’s song Chuck!  Well, OK, but that was what was on my mind there, you can’t get mad at me for that! OK, then just tell the dear readers what happened with bonds yesterday… OK, bonds got bought again yesterday, and the 10-year’s yield dropped to 3.78%… I guess there are more people out there thinking that the Fed Heads are going to pivot on rate hikes, and it’s time to buy the best yield you can get, right?   Not so fast there Tim… I still believe the Fed Heads will hike again in December… So, it’s not time yet… wink, wink…

I might as well talk about the Producer Price Index (PPI) because that’s what caused the dollar to weaken and bonds to get bought yesterday… The Rocktober PPI came in weaker than expected at .2% VS .4% expected. That got the folks that believe that the previous rate hikes have cooled inflation, all lathered up, and ready to go dancing in the streets! Does one print change things?  I don’t think so… just like I used to say, does one Swallow mean summer is here? Let’s not get ahead of ourselves here folks… This was one print, now if next month we see further weakening, then you might have something, but I doubt that will happen….

And you don’t have to take my view on that alone, Christopher Waller, a Fed Head, had this to say yesterday, “Waller said the Fed has got a ways to go before its stops hiking and the market got “way out in front” over the unexpected cooling in inflation last week.” – Bloomberg.com

In The overnight markets last night… The dollar got sold a little more, with the BBDXY index down  2 index points, to start the day, that will have some real economic news for us in Retail Sales and Industrial Production/ Capacity Utilization…  Gold is flat to up a buck this morning, while Silver has gained back most of yesterday’s loss, gaining so far this morning, 35-cents. Oil is up to a $87 handle this morning, and bonds are at the same level as yesterday’s close.

Another item that pushed the price of Oil higher, was news, not to be taken lightly, that 2 missiles from Russia found their way into Poland, killing two…  I don’t know if these were stray missiles, but I doubt that seriously, because of the technology that these weapons have these days, make them quite accurate. So, was this an attempt by Russia to draw more countries into this conflict? I sure hope not, and so far Poland has not returned fire, nor do I expect them to… But all of this saber rattling has got the price of Oil bubbling, and Gold well bid…

In a follow up of what I was talking about in a previous Pfennig, CNBC.com reports that: “Households increased debt during the third quarter at the fastest pace in 15 years due to hefty increases in credit card usage and mortgage balances, the Federal Reserve reported Tuesday.

 

Total debt jumped by $351 billion for the July-to-September period, the largest nominal quarterly increase since 2007, bringing the collective household IOU in the U.S. to a fresh record $16.5 trillion. That’s an increase of 2.2% from the previous quarter and 8.3% from a year ago.

The increase follows a $310 billion jump in the second quarter and represents a $1.27 trillion annual increase.”

Chuck again… yes, well I would think that inflation is a main culprit here, as all the things that people have been buying in recent times, have gotten very expensive, and the costs go up, so does the credit card balances, and the home loan balances, and so on…

OK, longtime readers know that I’ve talked about a supply crunch in Silver for years now, and it has never actually come to pass, because of outside interference. But… I saw this on Kitco.com today, and thought it was a good reminder of the supply crunch that Silver is currently in… here you go: “The stocks of silver held by the London Bullion Market Association and the Comex, in New York, are thinning out. Silver inventories in London (the LMBA) have fallen for 10 straight months and are now sitting at a new record low of just over 27,100 tonnes, or 871.3 million ounces.

On the Comex, registered silver totals just 1,186 tonnes, or 38.13Moz, a five-year low. In September the LBMA vaults lost 45.166Moz, more than the Comex’s entire registered category.

Analysts are keeping a close eye on declining silver stocks worldwide, including Sprott Money, which wrote an article on the subject. The article references a column by Bullion Star’s Ronan Manly, in which he states that “There is an unprecedented situation emerging in London, where the relentless hemorrhaging of one of the world’s largest stockpiles of silver is now well and truly under way.” -Kitco.com

Chuck again… As long as the Big 8 Bullion Banks are allowed to hold short positions in Silver that far outweigh the Silver that’s above the ground, then Silver will never be able to be priced correctly, as far as supply and demand are concerned… I’m just saying…

In Today’s Data Cupboard we have the Rocktober print of Retail Sales, which I told you earlier in the week, that I expected this to show some life after months of being either negative or flat. The BHI indicates that it will be a stronger print today. We’ll also see Rocktober prints of Industrial Production, I think it will show weakness, and Capacity Utilization, I think it will be steady Eddie…

You know, it make me want to yell at the walls, when I see all these Fed Heads our on the speaking circuit… Who pays for those boondoggles? Ahem… Besides, they never rally tell us what’s going on at the Fed HDQTRS….  We will see 2 Fed Head speakers today, and tomorrow there will be 4!  UGH!

To recap.. The dollar started the day up but by the end of day it was still up, but not by as much as the start of the day. Russia fired two missiles into Poland, and that got the world all jimmied up pushed the price of Oil higher, and Gold got well bid…  OPEC announced they will discuss further production cuts, and that too helped Oil to gain yesterday. The overnight markets kept the pressure on the dollar, and it will be interesting to see what goes on today, with a couple of real economic reports on the docket.

For What It’s Worth… This is a very good article that straightens out all the claims by the current administration that the inflation is “greedflation” and that companies are pushing prices up to gouge customers… I never believed that, and now there’s this article: Why “Greedflation” Isn’t Real – DollarCollapse.com

Or, here’s your snippet: “Even as price inflation slows and we move past June’s peak, progressives continue to push the concept of “greedflation”—that this year’s price inflation is caused by corporate greed and price gouging. This is inaccurate, based on bad economics, and it blames a consequence of the problem rather than the problem itself. If we want to address the real issues in the economy and avoid similar pain in the future, we need to get serious and drop “greedflation” from the discussion.

The standard response to the assertion that this episode of price inflation has been caused by greed is to point out that there is no reason to think the level of “greed” in the economy has suddenly increased. That is true, but it doesn’t address the core of the “greedflation” argument. Most proponents will admit that the price inflation was kicked off by supply shortages resulting from the lockdowns. But they will argue that in an environment where everyone is talking about and expecting inflation, companies can raise prices even higher than rising costs would have compelled them. Companies can then enjoy larger profits, the story goes, at the expense of already struggling consumers.

So what’s the problem with this? Well, it rests on a common but flawed understanding of prices. People often talk about prices in two contradictory ways. Either they frame them as objective measurements of value or as arbitrary numbers made up by businesses. Neither of these characterizations is correct. Prices are not an indication of objective value. In fact, they come about through exchanges between people with expressly different valuations of the goods and services being traded.

If you try to sell me a cup of coffee for $4, you demonstrate that you value the $4 more than the cup of coffee. Notably, the exchange will only occur if I value the cup of coffee more than the $4 I’d be giving up. So prices are records of exchange ratios brought about by differing subjective valuations. Whenever you choose not to buy something you can technically afford, you reveal the subjective nature of prices.

In that same way, prices are not arbitrary. As Thomas Sowell writes in the opening pages of his book Basic Economics, “While you may put whatever price you wish on the goods or services you provide, those prices will become economic realities only if others are willing to pay them.” Going back to the above example, you are free to jack up the price of your cup of coffee as high as you please, but you will not sell it until you charge a price someone is willing to pay. That’s why the very concept of price gouging is flawed. You may not personally like how high the price is, but others still consider it a worthwhile deal.

The fact that companies are charging higher prices these days does not mean those prices are somehow wrong. In fact, we know they are not wrong because people have demonstrated a willingness to pay them. In other words, this year’s higher prices are not the problem—they merely reflect the problem. Instead, the real issue is that State governments locked down businesses in 2020 while the Federal government created trillions of new dollars and injected them directly into the economy in 2020 and 2021.”

Chuck again… I know, I know, a very long snippet this morning, but.. the article is quite long, and if you have the time to click on the link and read it, well… then you’ll see why it was a long snippet…

Market Prices 11/16/2002: American Style: A$ .6777, kiwi .6170, C$ .7547, euro 1.0425, sterling 1.1908, Swiss $1.0640, European Style: rand 17.2217, krone 9.9425, SEK 10.4155, forint 390.28, zloty 4.5127, koruna 23.3474, RUB 60.47, yen 139.47, sing 1.3675, HKD 7.8225, INR 81.30, China 7.0794, peso 19.35, BRL 5.3260, BBDXY 1,272.13, Dollar Index 106.00, Oil $87.35, 10-year 3.78%, Silver $21.92, Platinum $1,021.00, Palladium $2,096.00, Copper $3.76, and Gold… $1,781.67

That’s it for today… Well, a couple of years ago, I told my kids that when their mom is away, and I’m all alone at home, they might want to check in with me, since my health history isn’t the greatest… And this year they’ve finally gotten the message. Thank you Dawn, and Andrew… Our Blues get back on the ice tonight VS the Blackhawks.. This used to be a HUGE rivalry, but in recent years, the two teams have been in different divisions, and don’t play each other that much… Let’s Go Blues! Tomorrow night, downtown St. Louis and nearby will be crazy, with two soccer games, and a hockey game going on… I hope all three are well attended, and ready to cheer! Our new soccer stadium will make its premiere opening tonight… That’s pretty neat… Vince Guaraldi Trio takes us to the finish line today with his song: Charlie Brown Theme… I hope you have a Wonderful Wednesday today, and please remember To Be Good To Yourself!

Chuck Butler

When Yen Rallies, You Know The Dollar Is In Trouble!

November 15, 2022

* Currencies & metals get sold early, rally late

* Overnight the dollar gets sold… 

Good Day! And a Tom Terrific Tuesday to you! Well, as you can tell, the Pfennig is a little later this morning than usual… The alarm went off, and I went right back to sleep, for I had a rough night, with my stomach… No biggie, just chemo stuff… I’m good to go today! I’m glad that years ago, I decided to take my chemo at night, so that if I had problems, they were during the night, and not during the day, when I needed to work, etc. From those dark days of a few years ago, when I was curled up in chair, and didn’t want to move, to these days, when I’m up moving, and going places… I have to say there’s a HUGE difference… The Stephen Kummer Trio greet me this morning from their album: Christmas In The City, and their song: When My Heart Finds Christmas…

Well, yesterday, was a strange one… The day started with the dollar being bought, and the BBDXY Index up 5 index points, and Gold down $12, and had all the inklings of a bad day for the currencies and metals, but that never came to fruition… And all day the currencies & Gold fought back, and at the end of the day, the BBDXY was up 3 index points, and Gold had turned that negative $12 loss into a 30-cent gain! I know, 30-cents is a long way from the $49 gain Gold had last Thursday, but hey! It was positive, and not negative, right? The euro remained above $1.03, and the Aussie dollar (A$) climbed over the 67-cents handle, and kiwi climbed over the 61-cent handle… These two have been the fastest moving currencies VS the dollar since last Thursday…  Yen has wrapped a tourniquet around the bleeding it has been experiencing for over a month now, and has rallied nicely VS the dollar… There’s something there that I have to say, that’s not good about either currency… you know the dollar was getting sold widely, when the yen rallies…

So, Gold ended the day at $1,72.60, and Silver ended the day at $22.08… That’s the first time we’ve seen Silver back over $22 since 2014… I know that couldn’t be right, no? Well, according to the dollar/ Silver chart I looked at last night, it was 2014…  Any way, it’s been a long time for Silver to get back into the game… Of course $22 is not what you and I would pay for Silver these days… The premiums are still outrageous, indicating the lack of supply in Silver… And it illustrates a picture that I’ve tried to paint for you previously, and that is… When the stars are aligned and the karma is flowing, and physical Gold & Silver are getting bought by the masses, the supply will become drained, and the premiums, if they are outrageous now, will be more than outrageous… So… What are you waiting on?

The price of Oil slipped again and ended the day trading with an $85 handle… That’s not the direction for Oil that our friends (NOT!) at OPEC wanted to see for Oil… Ahh, the best laid plans of mice and men, eh? I think they need to look further out on the horizon to see Oil climbing in price once again…

The 10-year’s yield rose yesterday and ended the day with a 3.88% yield. I told you yesterday, that I thought that calmer heads would come to the head of the class, and calm things down, an that is what it appears to have happened.

The overnight markets last night…  The dollar was sold to the tune of 9 index points off of the BBDXY dollar index. The euro is trading above 1.04 this morning, and the yen is moving in the right direction too. Gold is up $4 in the early trading today, while Silver sees some profit taking moving it back below $22 this morning with a 22-cent loss.  The price of Oil has slipped again, and trades this morning with an $84 handle, and Bonds are drifting… So, I guess that Oil’s future is all dependent on the timing of China’s opening / ending their zero Covid. You may recall that when it was rumored that China was going to open up, that all the anti-dollar assets, including Oil rallied strongly…

Well, I wanted to talk about this yesterday, and then plum forgot…Another “senior moment”…  Remember John Corzine? He of the Wall Street golden boys, and went to start his own firm, only to have the whole thing blow up in his face, as he was guilty of taking client funds and trading them like the Company’s money… And after all the shame was placed on him, a few years later, he ran and became the Gov. of New Jersey!

The reason I bring this up, is that the FTX, let’s call him SBF, stared the crypto clearing company, and then began to move client funds to his trading partner firm…Sound familiar? Oh, and now there’s $1-$2 Billion missing… Wait! What?  Yeah, it’s missing… And probably lost in the market…  So, and bets on whether SBF is absolved of his crimes, in few years?    I would almost bet on that one!

One of the things that propel inflation higher is “expectations”.. People believe that the prices they are going to pay for a new car will be higher in a couple of months, so they rush out to buy it now, and that propels inflation higher.. .So, expectations are very important to the Fed Heads when they look at inflation… I’ve told you before that the Fed Heads don’t really pay attention to the stupid CPI, but instead follow the PCE (personal consumption expenditures), and the expectations…  Well, a day after the stupid CPI printed, the preliminary November data showed that inflation expectations rose for the second straight month with 1-year expected up from 5.0% to 5.1% and 5-10Y expected up from 2.9% to 3.0%

I know, if you’re like me, Lord help you!, You are laughing at the irony of these reports… The Fed Heads and their expectations of inflation… So, did you ask yourself this question, like I did, “I wonder when they began to expect inflation when they flatly denied it existed a year ago? “

Recall that I drew the picture for you sometime back, about how eventually, these rising prices will get to a breaking point, and when they do, that’s when the mobs of people show up at the Eccles Bldg., and demand the Fed Heads… I said that back when Sri Lanka was throwing their leader out, for allowing inflation to soar in that country… Well, news this past weekend had worker in Greece and Belgium striking because their wages aren’t keeping up with inflation… See, how this all reached a boiling point? We, as a country, are more tame than other countries, but still… there will be plenty of people at the boiling point that need to vent their frustrations…

The city of St. Louis, is getting an MLS expansion team… This has been in the works for a couple of years now… Thanks to my former colleague and good friend, Ty Keough, I’m a part of the initial season ticket holders’ group for the new team that will begin play in Feb…  Those could be some really Cold games, brrr…   And I won’t be here to attend them! Rick? You’re up buddy!

St. Louis City FC…  not exactly a fancy name, but I think it works…

OK, back to the markets… Hey! I’ve got to have those breaks to clear my mind for a minute or two, and then pick it up again.. .So… here we go….  This past weekend I saw a Twitter comment from Sven Nordgren, of whom I’ve quoted before,  so I had to check it out to see what he was referring to… And this is it… read this slowly so you get what I’m aiming for: “FED’S WALLER: THE FED WAS CAUGHT OFF GUARD IN 2021 WHEN INFLATION APPEARED TO MODERATE BEFORE EXPLODING.”

Well, I’m with Sven on this one as he replied “That’s utter Bull238#: How can you say things like that with a straight face? I would be laughing out loud and spewing spit all over from how riotous this statement that they made me make! 

Maybe you got a little too descriptive there Chuck?   Oh, well.. I’m sorry if I disgusted anyone, it’s not the first time nor the last time I will do that!

I found this on zerohedge.com last weekend… “In all the chaos over the past few days, we missed the release of the Fed’s latest Senior Loan Officer Survey which came out Monday. The results were striking: as one would expect from an economy in recession (and in some cases, depression), in nearly all categories, banks are reporting both tighter lending standards and sliding demand for new loans — and nowhere more so than in mortgages, both qualifying and otherwise, where demand has collapsed to “depression” levels as a result of the fastest every surge in interest rates.

But loan supply and demand aside, the punchline from the survey is that “most banks assigned probabilities between 40 and 80 percent to the likelihood of a recession in the next 12 months, with no bank reporting a probability less than 20 percent. Although banks in general assigned relatively high probabilities to a recession occurring in the next 12 months, most banks reported expecting the recession to be mild to moderate, should one occur. In addition, most foreign banks assigned a probability between 40 and 80 percent that a recession would occur in the next 12 months.”

Chuck again… just another in our collection of signs of a recession…

The U.S. Data Cupboard just has the Producer Prices Index (PPI) for Rocktober for us today, and it should continue to show that wholesale inflation is still perking along and sending higher prices to the retail operations… Tomorrow’s Data Cupboard is the big print of the week, with Retail Sales for Rocktober… So, until then, we have to make do with PPI…

To recap… The day began yesterday with the dollar getting bought, and Gold down $12, but the day ended with the dollar only up a bit, and Gold closing the day with a 30-cent gain Maybe calmer heads prevailed yesterday… I guess we’ll have to continue to monitor the trading each day, like I don’t do that any way!

For What It’s Worth… Well, a couple of years ago, I used to write a monthly letter for the Aden Sisters, Pamela, and Mary Anne, and in one of those letters I wrote about how the Central Banks were loading up with U.S. stocks, and pointed out that the Swiss National Bank (SNB) had really taken the Nestea plunge into U.S. stocks.. .Well, this article is about how they are now unloading those stocks… Uh-Oh… and it can be found here: https://wolfstreet.com/2022/11/11/the-swiss-national-bank-began-unloading-its-biggest-us-stock-holdings-incl-apple-microsoft-amazon-alphabet-meta/

Or, here’s your snippet: “The Swiss National Bank has spent years creating Swiss francs, buying dollars, euros, and other currencies with those francs, and then buying assets denominated in those currencies – including a vast portfolio of US stocks.

But that gig is up, it seems. Asset prices have fallen sharply, and the SNB is unloading. It doesn’t disclose details on its balance sheet, but it has to disclose its US stock holdings in quarterly regulatory filings with the SEC, and it now filed its Form 13F for its Q3 holdings. We’ll get to those in a moment.

The total of “Foreign currency investments” on its balance sheet – which includes US stock holdings plus its other foreign currency investments – peaked in February 2022 at CHF 977 billion ($1.04 trillion at today’s exchange rate). By the end of September 2022, they’d plunged by 17%, or by CHF 160 billion, to CHF 808 billion, the lowest since March 2020:

The composition of the CHF 160 billion plunge in its holdings is a mix of market prices, asset sales, and exchange rates of the CHF to the currencies involved.

From the SNB’s filings of Form 13F with the SEC, we can see that the SNB not only took losses from the price declines of its US stock holdings, but that it also sold down most of its largest positions, reducing the number of shares it holds in Apple, Microsoft, Alphabet, Amazon, Meta, etc.

From June 30 through September 30, the value of the SNB’s US stock holdings fell by 8.0 billion, or by 5.4”.

Chuck again… Well, I love it when a thought comes to fruition… you see in that letter about the SNB buying stocks I wrote about how when the stocks finally turn around, that the SNB would incur losses… of great magnitude, since their holding were HUGE!

Market Prices 11/15/2022: American Style: A$ .6748, kiwi .6158, C$ .7535, euro 1.0429, sterling 1.1956, Swiss $1.0429, European Style: rand 17.1947, krone 9.9235, SEK 10.3717, forint 389.83, zloty 4.5075, koruna 23.3222, RUB 60.57, yen 138.62, sing 1.3672, HKD 7.8267, INR 81.10, China 7.0378, peso 19.26, BRL 5.3260, BBDXY 1,2868.40, Dollar Index 105.81, Oil $84.82, 10-year 3.80%, Silver $21.86, Platinum $1,036.00, Palladium $2,094.00, Copper $3.77, and Gold… $1,776.01

That’s it for today… Tomorrow night we’ll have two soccer games in town… The City 2 team (mnor league) will play a team from Germany at our brand spanking new stadium, while across town the St. Louis U. Billikens men’s soccer team will play a 1st round game in the NCAA Tournament. Our Blues have closed the book on their 3rd period collapses, as they traveled to Colorado to play the defending Stanley Cup Champions last night and won!  Let’s hope they never revisit that chapter!   I’m waiting on any news of a Cardinals’ player acquisition… Free Agent signee, trade, waiver wire transaction, anything to keep baseball on our minds… Jack Jezzro takes us to the finish line with a song from his album: Bossa Nova Christmas, Home For the Holidays… I hope everyone can be near family at Christmas… I’m just saying… I hope you have a Tom Terrific Tuesday today, and please, pretty please with sugar on top, Be Good To Yourself!

Chuck Butler