The ECB Kicks The Can To Next Month…

June 9, 2022

* dollars, metals, bonds, cryptos, everything gets sold… 

* Russian rubles is the winner, winner, chicken dinner! 

Good Day… And a Tub Thumpin’ Thursday to you! My beloved Cardinals have run into a road block in Tampa the last two days, with the final game a day game today… I have gotten a kick out of seeing all that red in stands in Tampa, representing Cardinals fans… The Cardinals used to have spring training in St. Pete, for 57 years they were there… I took my family to the old Al Lang Stadium next to the marina when the Cardinals were in St. Pete a couple of times… And it appeared that there were tons of Cardinals fans still in the St. Pete region! The Rays are called the Tampa Bay Rays, but their stadium is in St. Pete! Those were fun times on St. Pete Beach back in the day for the Butler family! The Marshall Tucker Band greets me this morning with their song: Searchin’ For A Rainbow…

Well, my “day off” yesterday, from writing, first took me to the hospital to visit my oncologist… Then I went to buy a new TV, for the living room. Brought it back home, and then it took me a couple of hours to get it up and running, connected the WiFi and so on… I’ve said this before, but here goes… I’m not your last choice for a tech person! My oncologist is very happy with me… I’m losing weight, albeit slowly, (that’s her preference), my blood work is good, my blood sugar is good, right now… But as I told her yesterday, “the wolf is always at the door”…

So… while I was out yesterday, the dollar bumped along and is closed the day up 1 index point from where it was on Tuesday at 1,235… The euro climbed back above 1.07, and one would have thought after the glowing revue from UBS regarding the Aussie dollar (A$), and then following that up with a 50 Basis Points (1/2%) rate hike from the Reserve Bank of Australia (RBA), that the A$ would be kicking tail and taking names later, but that’s not the way things work any longer, folks… Besides… Their 50 Basis Points rate hike only brought their internal rate to .85%…

Gold  was hammered all day yesterday, and ended the day down $1.00 to close at $1,853.10, while Silver couldn’t find a bid all day either and ended the day down 18-cents, to close at $22.35…  I was reading the Daily Reckoning yesterday, and something that Jim Rickards said, caught my eye… Rickards said, that “Gold is so cheap right now, it’s practically a steal.”… Rickards goes on to explain his reasons for that thought, and if you’re interested in his thoughts on Gold, you can click here: The Real Reason Why Gold Has Stumbled – The Daily Reckoning 

The real mover since Tuesday has been the price of Oil, which closed yesterday at $122 and change… There are calls now that economists are seeing the price of Oil rise to $150… by the end of summer! WOW! Now that would certainly cause a disruption in the supply chain, as Truckers will have to feel as though they have to cut back or go broke! Quite Frankly, I can’t believe they’re not there already! Oh, U.S. Gov’t, can’t you hear me knocking, on your door? (Rolling Stones) But I’m not going to go on a rant about all that again this morning… I’m feeling pretty darn good this morning, and nothing is going to make me mad… Ahem, Chuck, you forgot about… Oh, never mind!

In the overnight Markets last night… The dollar slipped a bit, losing one index point in the BBDXY… There was some profit taking in the price of Oil, and the precious metals are getting sold out of the starter’s gate again this morning.  The 10-year Treasury is steady Eddie at 3.04%, and the cryptocurrencies are looking for a bid.  Everything is looking weak this morning… Gold is down $8 in the early trading, and Silver has lost the $22 handle once again… 

The Russian ruble is on the move again, and in the last 24 hours it has been the best performing currency. The ruble trades this morning with a 57 handle! WOW! Now that’s a move!  Like I said before, the ruble is an “Oil play”, and depending on your outlook for Oil… My outlook is for the price of Oil to remain high and go higher…  I’m just saying… 

The European Central Bank (ECB) is meeting right now, while my fat fingers are going to town on the keyboard, you should see them flying around! The ECB has been like the Fed/ Cabal/ Cartel, was in that that they continue to drag their feet in the face of soaring inflation… But that has to stop today, and I’m thinking that the ECB will buck up and hike rates out of the negative territory today… We, might find out by the time I finish so, if we do, I’ll let you know…

You might recall me writing a week or so ago, about how economists and analysts had agreed to say that the ECB would be hiking rates soon, and that’s what lit the fire under the euro to rise from the near dead, to the 1.07 level… Now, if the ECB disappoints today… Uh-Oh…

The Reserve Bank of New Zealand (RBNZ) announced yesterday that they are going to begin to sell the NZGB’s they bought in the last couple of years… This was BIG NEWS, because the Fed Heads have decided to allow their bonds to mature and not roll them over, but not to sell them, like the RBNZ is going to do… It helps that the RBNZ wasn’t in as deep dookie with regards to debt as the Fed Heads…

And Doug Casey threw this cat among the pigeons, saying that “Woke Companies will go Broke”…

I personally hope he’s right, especially the zombie companies, that are already broke, but are being kept alive by the Fed Heads… Let ‘em all die, and hopefully what starts up in their place, is a good strong company that takes its revenues, pays dividends, pays its employees, and puts the rest into capital improvements… Notice, I didn’t say make stock buy backs!

Getting back to currencies… The Japanese yen slid further weaker VS the dollar yesterday, ending the day trading with a 134 handle… Well, this is what I expected a long time ago, but somehow the yen kept plugging along, until finally, the Bank of Japan (BOJ) couldn’t plug any more holes, the dam began to leak… And now the BOJ is pleading with the major Countries to hold a coordinated intervention to stem the selling of the yen… So far, there have been no takers to their pleas…

For What it’s Worth… I saw this article and thought, now here’s a FWIW article if there ever was one! This is about how high earners are feeling pinched these days, and it can be found here: Advice for High Earners With Student Loans 2022 – Bloomberg

Or, here’s your snippet: “How much does it take to feel flush in the US these days? Not even $250,000 a year will get you there, according to a recent survey by Pymnts.com and LendingClub Corp., which found that 36% of those earning at least that amount say they’re living paycheck to paycheck.

Considering $250,000 is almost four times the median US salary and puts you in the top 5% of earners, it’s pretty unnerving that so many say they are spending everything they make each month. (And this was a census-balanced survey; they didn’t just ask people in high-cost areas such as New York and San Francisco.)

It’s even more disconcerting when you realize that most in that category haven’t had to make student loan payments for more than two years. Almost everyone has been taking advantage of the moratorium on federal student loans, which allows borrowers to press the pause button on payments without any interest accruing.

Student loan debt is a big deal for many in this crowd. More than 32% of total federal student loan debt is held by households with incomes from about $107,000 to $374,000, the largest percentage of any income group, according to the Education Data Initiative. The average amount of student debt within that group is $45,965 — also the highest for any income bracket.

For those with professional or doctorate degrees, which are common among top earners, the debt burden is often much higher. Student loans for MBAs total more than $66,000, while law school is more than $145,000 and medical school is north of $201,000. Assuming even just the average of $82,800 in total student debt for a graduate school borrower means monthly payments of about $950 a month have been on hold for almost 30 months.

When those payments will start coming due again is anyone’s guess. The Biden administration extended the moratorium in April until Aug. 31. The president is reportedly considering canceling up to $10,000 of debt per borrower, but potentially limiting it to those who earn less than $150,000 (or $300,000 for married couples).

It’s unlikely that those earning $250,000 or more will see any substantial forgiveness, which means their budgets are going to become even more stretched. According to the Pymnts.com survey, more than 12% of those earning at least $250,000 say not only are they living paycheck to paycheck, but they’re unable to pay some of their bills.”

Chuck again… remember back in the days of the height of the pandemic, and the Gov’t decided that they were going to give passes to: Students, renters, home owners, and instead of requiring them to send in checks, the Gov’t sent them checks? I said then that it was a bad precedent to start, and that proved to be bang on, considering that two more checks were sent out, and people still haven’t had to make payments!

This just in… The ECB announced that they are not moving rates this month, but expect to lift off in July, and will begin to taper their bond holdings this month…  Now, that’s a tricky way to disappoint the markets, but leave them wanting…  Not now, but later, dear…   Well, at least they didn’t leave the euro hanging on a line… I’ll give them that… But in reality, they have delayed their response to the soaring inflation in the Eurozone, and if I were a citizen there, I would not be happy! 

Market Prices 6/9/2022: American Style: A$ .7171,  kiwi .6445,  C$ .7959, euro 1.0727, sterling 1.2542, Swiss $1.0227, European Style: rand 15.2708, krone 9.4791, SEK 9.7914,  forint 369.00,  zloty 4.2788,  koruna 23.0059, RUB 57.94, yen 132.85, sing 1.3755, HKD 7.8484, INR 77.76, China 6.6770, peso 19.56, BRL 4.8853,  BBDXY 1,234.26,  Dollar Index 102.26, Oil $121.97, 10-year 3.04%, Silver $21.93, Platinum $988.00, Palladium $1,942.00, Copper 4.35, and Gold… $1,845.35

That’s it for today, except to send along GREAT BIG HAPPY BIRTHDAY GREATINGS to one of my fave people in the world, Laura Baur! Happy Birthday Laura Lou! On Sunday, Chuck & Kathy will celebrate our 46th year of marriage… I know I’ve told you this before, but for me… it was love at first sight all those years ago, when I was running on the track, and first spotted her performing cheers… OK.. I’m hoping that our kids will use our marriage as a template for theirs! And I’m now 15 years into having been diagnosed with Stage 4 Metastatic renal cell carcinoma! Next week on the 14th will be the anniversary of my first caner surgery… I remember the day, that my good friend, Doc. Jeff Atkins, came to my door to tell me that I had cancer… I said to him then, “I’m going to beat this thing”… Well, I haven’t beaten it yet, but so far I’m winning! And that’s that! It was sad news the other day to learn that Jim Seals, of Seals & Crofts had died, and so with him in mind, Seals & Crofts takes us to the finish line today with their song: Diamond Girl… I hope you have a Tub Thumpin’ Thursday today, and please remember to Be Good To Yourself!

Chuck Butler

 

Calls For Intervention In Yen, Are Being Made…

June 7, 2022

* dollar buying is strong in the overnight markets

* Hedge Fund sues the LME, for market manipulation… 

Good Day… And a Tom Terrific Tuesday to you! I plum forgot to tell you the results of my scans last Thursday… My oncologist sent me a note Thursday night, that said, “ Scans are clean, no new sign of cancer, keep up the good work, see you next week” Which reminds me that on Wednesday, tomorrow, there will be no Pfennig, as I’ll be at the oncologist to get poked for blood, and go over the details of the scans… No Cardinals baseball last night, so I had all kinds of time to read articles… And I failed miserably! Instead, I got out my 1935 Martin guitar, and tried to recall anything I could! A friendly neighbor urged me to get back to playing, at the graduation party on Sunday, and so… Now, we’ll see if I keep it up… I recall the first time I ever picked up a guitar, I wanted to learn how to play songs on it so badly, I played until my fingers bled… And then I couldn’t play it again for a week! UGH! I always loved playing my guitar, and singing along, but these days, my voice has gone through the gauntlet of radiation, and years of medicines… One of the artists I used play all his songs, Neil Young, greets me this morning with his song: Only Love Can Break Your Heart

We began the day and week yesterday morning having seen the selling of the dollar in the overnight markets, only then to see the dollar’s loss erased in the U.S. session… Hmmm, and just yesterday, I was talking about the ESF (Exchange Stabilization Fund) and it appears to me as though it was put to use in good fashion, as the BBDXY gained 5 index points on the day! The euro slipped back below the 1.07 handle. Gold couldn’t hold its early gains either, and ended up losing $9.90 on the day to close at $1,842.20, while Silver was able to hold onto a small piece of its early gains (+44-cents), and ended the day up 13-cents, to close at $22.13… The price of Oil gained a buck, and the 10-year’s yield rose to 3.04%…

Some might say that the Treasury’s gains in yield is what got the dollar bought, and Gold sold… I say baloney! The markets are supposed to forward looking, not current reactions based, and if they were forward looking, they would be staring right down the barrel of a sawed off shotgun! And if the markets really think the Treasury’s 3.04% yield is the cat’s meow, they need to look at the yield VS inflation, and tell me again why people buy negative yielding bonds! Oh, and if inflation isn’t bad enough, our friends (NOT!( at Saudi Arabia, announced that they were upping the price for their Oil… Which, if you read my tirade last week about how the Gov’t has shut down U.S. production, and we have to rely on terrorists for our Oil… Don’t get me started again on that subject!

In the overnight markets last night…. the dollar has been bought as if there is a blue light special on dollars… The BBDXY has gained another 2 index points and trades this morning at 1,234… The dollar reminds me of a star that’s about to burn out, for it will burn the brightest right before it does burn out…  Gold is up in the early morning trading by $7, and Silver is flat, as we start our day…  The price of Oil trades with a $118 handle again today, and appears to be waiting for the next shoe to drop before moving any higher.  And bonds are also flat this morning trading with a 3.03% yield in the 10-year Treasury… 

The good folks at GATA sent me this note that they pulled from Reuters: “U.S. hedge fund Elliott Associates is suing the London Metal Exchange (LME) for $456 million for cancelling nickel trades after chaotic trading in March that forced the exchange to suspend its nickel market, the LME said today.

The legal action piles more pressure on the exchange, which is being probed by regulators and is struggling to restore trust and volumes in its nickel market.

Elliott said the LME should not have halted trading and erased deals after prices more than doubled to over $100,000 a tonne in a matter of hours on March 8.”

Chuck again, well it’s about time somebody started suing these exchanges for their blatant disregard for clients’ losses… Now, if someone with some deep pockets would file a lawsuit against the COMEX… We might get somewhere! Or, even better the commodity regulators for allowing such blatant trading to harm clients!

And that ties in so well with this… In Ed Steer’s Saturday letter, he always highlights the “days to cover chart”.. This chart tells us the number of days of production it would take to cover the short positions… And that chart told us on Saturday that it would take 164 days of production in Silver to cover the short positions, and 44 days of production in Gold to cover the short positions… I find that shorting something before it’s even taken out of the ground, like metals, is different than shorting green beans or corn… There’s always a chance that weather or other mother nature tricks could play hell with yields of beans or corn…

I’ve said this before so listen to me this time… I believe that it should be unlawful for any entity to short more metal than they hold in their trading accounts… Enact that law, and watch the metals soar! Write your representative, and you can even call it “Chuck’s law”!

OK, moving on to other things this morning… In yesterday’s 5 Minute Forecast, editor, David Gonigam, quoted me from yesterday’s Pfennig, regarding the fall of the dollar’s use by international countries… I read the 5 Minute Forecast, daily, for David does a great job and writes excellently!

The rot on the Japanese yen is being exposed, as the yen drops to a two decade low VS the dollar. Long ago, in a galaxy far away, I wrote in the Pfennig about how the over two decade muck of deflation and no economic growth could use some inflation, and to to achieve that, the Bank of Japan (BOJ) should allow the yen to weaken to allow it import other countries inflation… Not a lot of inflation would do the trick, not the runaway stuff we’re seeing here now… 

Well, the yen is dropping like a rock again, and the calls for intervention from the BOJ are being heard loud and clear, but the rest of the world is playing deaf, and blind to Japan’s problem… So the yen is trading this morning at a two decade low of 132, and is probably just the beginning of the rot being exposed on the yen’s vine..  I’m just saying… 

Over this last weekend I came across an article that caught my eye… This was the headline in USA Today: “’I exhausted my savings’: Inflation has Americans turning to loans, credit cards to cope. Does it pose big risks?
Some Americans are relying on credit cards to make ends meet.” – USA Today

Chuck again… We will begin to see the damage done here to consumer credit lines when the next data print that encircles that item prints… When we last saw Consumer Credit (read debt) the first quarter showed that it had increase 1.7 Trillion dollars since the last quarter of 2019, and it stood at $15.84 Trillion… So, it does appear to me that the rot is already showing on the Consumers’ Balance Sheet vine… And that can’t be a good thing going into a period of high inflation, and a slower economy…

Oh, and guess what prints today? Yepper, Consumer Credit for April will print, so we’ll get to see the color of the latest report… I’m guessing here that it won’t be pretty…

Well, the good folks at GATA also sent me a couple of notes this past weekend about how India’s imports of Gold surged in the month of May, and so too did other countries… Buying physical Gold instead of dollars, apparently… Gold in just about every other currency on earth is at all time highs, it’s just that here in the U.S. with the ESF propping up the dollar, Gold lags…

In my best Andy Rooney voice, “Did you ever wonder, how the CFTC (commodities regulator) never found price manipulation in Silver?” Because they never looked! They said they did, but who was there to call them on it? No one… And since the price manipulation is so blatantly obvious, they would have to have been blind, not to find it… I rest my case..

The U.S. Data Cupboard yesterday was bare, and today, we’ll get the aforementioned Consumer Credit report, this one will be for April… The data prints this week will come straggling in and probably smell like a wet dog… Tomorrow’s Cupboard, has nothing for us… Well, actually it does have a print, but it’s something we don’t care about, or I don’t care about, so it’s nothing to me! Don’t forget that on Friday this week, the latest stupid CPI (consumer inflation) will print for May… You won’t want to miss that, just so you can throw darts or tomatoes at the folks that put together this report…

To recap… The dollar’s selling overnight the previous night was shut down during the U.S. session and the dollar index gained 5 index points, thus pushing the euro back below the 1.07 handle. Gold couldn’t hold its early morning gain, and Silver nearly gave back all of its early morning gain. Are consumers using their credit cards for everyday purchases now? And hedge fund Elliot Assoc. is suing the LME for cancelling their orders in nickel… It’s about time someone took action against these clearing houses or regulators, for allowing clients to lose money…

For What It’s Worth… this article really just rehashes all the things I’ve talked about, yelled about, whined about and so on, but I think it’s important to hear these things from other voices, so you don’t think I’m just a cranky old man…  This article can be found here: What happens when the “experts” are wrong? | ZeroHedge

Or, here’s your snippet: “Think about it– inflation has been raging for more than a year. Yet they’ve changed almost nothing.

Most notably there’s the Chairman of the Federal Reserve, Jerome Powell, under whose leadership the United States has experienced its worst inflation in 40 years.

His approach so far has been nothing short of extraordinary. It started in February last year when he denied inflation was even a problem, insisting that “inflation is just very, very low”.

A few weeks later he started singing the ‘inflation is transitory’ chorus. By June 2021 he doubled down, saying that higher inflation would soon wane. That’s also when he projected a 2021 inflation rate of just 3.4%.

By December, his 3.4% inflation projection proved hilariously wrong; 2021 inflation came in at 7%. And yet the Fed still hadn’t yet lifted a finger to stop it.

He even gave a press conference late in the year saying, “I don’t think that we’re behind the curve. . . I do think it’s premature to raise rates today. I don’t think that’s controversial, certainly, I don’t know anyone arguing for that today.”

 

Seriously? Out of hundreds of millions of people across the country suffering higher prices, he literally didn’t know a single person who thought the Fed should be doing more to fight inflation? What a joke.

But this comedy of errors gets better.

Home prices across the US had surged 20% by December 2021. And yet, the Fed was still printing tens of BILLIONS of dollars per month to ‘support the housing market’. This is more ridiculous than Kanye West receiving millions of dollars in PPP loans (which really happened).

Apparently the Fed didn’t think that a 20% surge in home prices was reason to change anything about their approach.

This is the larger point– everything was broken. Powell’s Fed printed trillions of dollars and helped engineer inflation. Yet they failed to predict it. They rejected it. They downplayed it. They continued fueling it. And they did absolutely nothing to stop it.

In any rational organization this person would have been fired long ago. And yet, two weeks ago, he was sworn in for his second, five-year term as Fed Chairman.

It’s the same story with Janet Yellen– Powell’s predecessor as Fed Chair who is now the US Treasury Secretary.

Similarly, Yellen failed to see how keeping interest rates near zero for years and years could possibly lead to inflation. She also failed to see how trillions of dollars in government spending could possibly lead to inflation. And she has failed to do anything about it.

Yellen at least had the stones to admit she made a mistake; last week she told reporters that she was wrong when she called inflation “small and manageable” back in 2021.

Like Jerome Powell, though, she’s still in her job.

The list goes on and on. Nobel Prize winning economist Paul Krugman also recently acknowledged that he “called inflation wrong last year” when he insisted that government spending would not cause inflation.

(Krugman is the same guy who went on CNN years ago suggesting the government should lie about a phony alien invasion as an excuse to spend more money.)

It’s extraordinary how some of the most prominent ‘experts’ have been so wrong. And yet they’re all still in their same positions.

I’m not trying to be cruel; we’re all human, and we all make mistakes. But it’s silly to pretend that these experts are flawless and infallible.

They’re not flawless. They’re not infallible. Nothing is.

Chuck again… the article was written by Simon Black, who is very good at pointing out things, and expounding on them… I enjoy reading his stuff! 

Market Prices 6/7/2022: American Style: A$ .7175,  kiwi .6437,  C$ .7944, euro 1.0668, sterling 1.2496, Swiss $1.0235, European Style: rand 15.3607, krone 9.5313, SEK 9.8399,  forint 365.57,  zloty 4.2966,  koruna 23.1933, RUB 61.16, yen 132.80, sing 1.3767, HKD 7.8458, INR 77.71, China 6.6704, peso 19.53, BRL 4.7943,  BBDXY 1,234.54,  Dollar Index 102.61, Oil $118.31, 10-year 3.03%, Silver $22.06, Platinum $1,012.00, Palladium $2,017.00, Copper $4.36, and Gold… $1,848.47

That’s it for today, and tomorrow, but I’ll be back on Thursday… I was telling my good friend, Dennis Miller, about the problems I’ve having recently with my stomach acting up… I think the chemo is beginning to wear on my digestive system… But as I told him, “if that’s the price I have to pay to have clean scans, then so be it”… Well, I’m still all by myself here, until late Thursday night… I was just informed that Kathy will be heading back to Florida on the 25th, to be with her old teaching friends… then I’ll be all by myself once again for a week…The late great, Marvin Gaye takes us to the finish line today with his song: What’s Going On?  I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself! 

Chuck Butler

 

 

 

 

D-Day Remembered…

June 6, 2022

* Friday’s job Jambore was a farce… 

* The dollar gets sold in the overnight markets… 

Good Day… And a Marvelous Monday to you! Well, as usual, when I get scanned, I have to drink the barium for contrast, and the barium has always upset my stomach, and then you add in my daily chemo, and I’m thrown for a loop for 24 hours… And that’s what happened last Thursday to Friday morning, but then I was good to go! Good Friend Mike came by and we sat outside watching the Cardinals, Golf, and Hockey! Today, we remember, D-Day, June 6, 1944… Project Overlord, was the largest invasion by sea in history… Jane’s Addiction greets me this morning with their song: Been Caught Stealing… 

Well, the dollar rallied on Friday, after the Jobs Jamboree said that there were 390,000 jobs created in May… Well, I’m here to tell you that the BLS in their infinite wisdom decided to add 213,000 jobs to the surveys they received.. Now, would the dollar have gained on the day if the jobs number was 177,000? Far below the expectations? I doubt it… but then, there’s always the PPT with their treasure trove of funds, in the Exchange Stabilization Fund, that can be used at any time to prop up the dollar… But with the markets being blind to the fact that the BLS number is fake, they bought dollars… Because… with employment so strong, supposedly, there’s nothing keeping the Fed Heads from hiking rates further, which increases the dollar’s yield differential to other currencies…

The BBDXY moved higher on Friday and closed at 1,229.93, up over 4 index points on the day. Gold lost $17.20 on the day to close the week at $1,851.30, and Silver lost 36-cents to close the week at $21.90. I get why Gold & Silver lost ground on Friday, IF…. You believe the BLS report on jobs… But If I were still a trader I would be pointing out the discrepancy, and making a big deal out of it… But then again, no one ever listened to me, then, so why would they listen to me now? Back in 2001, when I wrote the white paper titled: The Decline of the Dollar, and we tried to get the press to comment on it, no one would touch it with a ten foot pole, but… once the dollar began its 10 year slide in Feb 2002, everyone wanted to talk to me and ask me how I knew this was coming…

All the facts were there, staring people in the face, but no one wanted to believe what they were seeing… except me, of course! The dollar’s trend has run its course, now, starting with the exposure of the debts of Europe in 2011, but this time, things are different, in that, the markets no longer move on fundamentals, and instead are driven by 1. Trader sentiment, and 2. The Exchange Stabilization Fund… , and that’s all I have to say about that!

In the overnight markets last night… The dollar got sold, and erased the dollar’s gain from Friday. The BBDXY is down 2 index points this morning, and Gold is up $3 in early trading, while Silver is out in front of eveything else this morning and is up 41-cents… The price of Oil is unchanged at $118.87, and Bonds are getting that feeling that there will no longer be support for them from the Fed/ Cabal/ Cartel.. The 10-year’s yield has risen to 2.95%… 

So, there’s been a recall vote on Boris Johnson in the U.K., and it looks like he’s in trouble, but we’ll have to wait-n-see… Also, the Swiss Bank UBS, issued a press release that said, “UBS thinks that buying the Australian dollar (A$) is a phenomenal trade.”  Hmmm… apparently, UBS is long A$’s, and they need everyone to buy to prop up their trade… I know, I nkow I’m being cynical here, and it bothers me because I happen to agree with them… 

I came across this bit of information on Friday last week… MarketWatch had this article that I’m going to give you a snippet of here regarding the dollar’s diminishing importance around the world: “The U.S. dollar’s status as the dominant global reserve currency shows few signs of waning, despite a flurry of challenges from Russia and China, as MarketWatch reported this week.

But if the dollar does eventually cede its status as the most popular currency for central-bank reserves, international trade and bank deposits, then this latest data point will likely be remembered as a milestone.

On Thursday, the International Monetary Fund reported that the percentage of international currency reserves denominated in dollars has fallen below 59% to a new low of 58.81%.” 

58%? Wow, that’s low… I remember years ago, when I was doing presentations, I would talk about how the dollar had fallen to 63% of international reserves denominated in dollars…  To me, this tells me that all the talk about how countries are dumping dollars is coming to fruition… I’m just saying… 

OK, I was going to write about this last week, but decided that it just wasn’t worth getting everyone all riled up… I’m talking about the news that the U.S. was going to supply Ukraine with a rocket system… When I heard that, my mind immediately went to the thought that this was a bad thing to do, because Russia could convey that as an act of war against them… Well, as the weekend went on, that’s exactly what Russia thought, and Putin warned the U.S. that Russia would attack Western cities if Ukraine uses the rocket system we provided them… Now, this could all be saber rattling, or it could be the last thing on earth we want to hear… Because, once you get the two heavyweights in the ring, the nuclear weapons come out… Now, that’s a comforting thought today, isn’t it? I’m sorry but this was on my mind all weekend, and when something’s on my mind, longtime readers know, that I’m going to write about it! I have to hope that all this is just saber rattling, but when you deal with the likes of Putin, you have to take him for his word… I have something for you in the FWIW section today regarding all this, make sure you don’t miss it!

The U.S. Data Cupboard this week is basically bare for most of the week, with only the stupid CPI for May printing on Friday this week… The U.S. Data recently has been disappointing at best, but it still doesn’t point to a recession… The Atlanta Fed’s program that first told us that the 1st QTR GDP would be negative, are showing that the 2nd QTR GDP will be 1.1%… So, that negates a recession… But this slow moving, very uneven economy is still prevalent in our daily lives…

To recap… The Jobs Jamboree last Friday set the tone for dollar trading the rest of the day.. The BLS added 213,000 jobs to the surveys, to make the job creation number look good for May, and the markets went hook line and sinker for the trumped up report. The BBDXY rallied over 4 index points on the day, and Gold & Silver both gave back the gains they had made the day before.

For What It’s Worth… Well, the Davos crowd, that likes to think they know better than al of us, was still at it last week, and came to debate between Henry Kissenger, and George Soros, regarding what should be the course of action in Ukraine… And that article can be found here: Davos 2022: The Octogenarian Oligarch Cage Match – Gold Goats ‘n Guns (tomluongo.me)

Or, here’s your snippet: “I never thought I’d live to see the day when the “Too Old to Rule the World, But Too Young to Die Crowd” (apologies Ian Anderson) would meet at Davos and fight over what to do about Russia.

In a twenty-four hour period two of the most influential men on the planet came out swinging as to what course of action the Davos Crowd should take in Ukraine.

The first blows were landed by Mr. Realpolitik, Henry Kissinger, who most people were surprised to find was still alive. Kissinger true to form told everyone that it was time to begin negotiations for a settlement with Russia soon.

“Negotiations on peace need to begin in the next two months or so, [before the conflict] creates upheavals and tensions that will not be easily overcome,” the 98-year-old veteran diplomat said of the crisis. The outcome will determine the rest of Europe’s relationships with Russia and Ukraine alike, he said. “Ideally, the dividing line should return to the status quo ante,” he said.

“I believe pursuing the war beyond that point would turn it not into a war about the freedom of Ukraine, which had been undertaken with great cohesion by NATO, but into a war against Russia itself,” he added.

Kissinger is simply talking sense, knowing full well that the situation in Ukraine is getting very close to militarily unsalvageable for Ukraine. You know things are bad when the British Press is now acknowledging this, even though The Telegraph was told to change the original headline.

Even Western reporters on the ground there are admitting the truth…

The front in the Donbass is collapsing on the heels of the surrender, sorry “evacuation,” from the Azovstal Steel Factory of the Azov Regimen’s top commanders.

The Ukrainians aren’t just running out of ammunition, the men are running out of morale. When you break the will of an army, it doesn’t matter what you try to force feed into the conflict it won’t change the outcome. If reports are true Ukraine will only see about 15% of the $40 billion the Biden Junta approved last week.”

Chuck again… Well, it’s difficult for me to agree with Henry Kissinger on anything, but in this case I’m in full agreement, we need to find a solution/ compromise/ end of the war, before it escalates further!

Market Prices 6/ 6/ 2022: American Style: A$ .7222,  kiwi .6527,  C$ .7960, euro 1.0729, sterling 1.2565, Swiss $1.0396, European Style: rand 15.3087, krone 9.4002, SEK 9.7430,  forint 361.70,  zloty 4.2716,  koruna 23.0454, RUB 61.70, yen 130.64, sing 1.3731, HKD 7.8455, INR 77.63, China 6.6396, peso 19.49, BRL 4.7780,  BBDXY 1,227.00,  Dollar Index 102.12, Oil $118.87, 10-year 2.95%, Silver $22.33, Platinum $1,033.00, Palladium $2,021.00, Copper $4.37, and Gold… $1,854.47

For What It’s Worth… Well, late last week, I finally broke down and went out to buy a new laptop… I did so, brought it home and it wouldn’t turn on… UGH! I had to take it back, and buy a different one! I was NOT a happy camper! But the new one works just great, no problems, and I’m up and running this morning, without problems, and I have to tell you that at my age, I’m not good with problems any longer! I call them “frustrations”.. And you can hear me saying, “I need these frustrations like I need a hole in my head!” So, yesterday was the graduation party of Ms. Allison Road… My… time has passed! She’s a grown woman now, and heading to Xavier next fall… I held her when she was a baby! Congrats to her parents, Rick and Laura, you’re now empty nesters! The Temptations take us to the finish line today with their song: The Way You Do The Things You Do… I hope you have a Marvelous Monday today, and please remember to BE Good To Yourself!

Chuck Butler

 

Is Demand Destruction In Our Future?

June 1, 2022

* Dollar rebounds on Monday… 

* Gold & Silver start June with rallies! 

Good Day… And a Wonderful Wednesday to you!  And Welcome to June! Yesterday, here in the middle of the country, the day started out ugly, but by noon it was another Chamber of Commerce day here! But rain has moved in, and the temps will be cooler the rest of this week… I sat outside enjoying the day yesterday, and finished my last book.  Bob Dylan greets me this morning with his hit song: Knocking On Heaven’s Door…
Pfennig tradition calls for this: June is busting out all over, all over the meadows and the hill, buds are bustin’ out of bushels and the rompin’ river pushes every little wheel that wheels besudes a mill…. Ahhh, a little Rogers & Hamerstein… to start our day and month! 
Well, our first day back from the holiday weekend, was not a good one for the currencies and metals. We said good bye to May, and it appeared that we are going to be saying good bye to the currency rally, dollar selling, and the comeback for Gold & Silver. But, May too started out looking like that, and we know that the dollar ended up having 3 straight weeks of losses… So, we could very we’ll get things turned around again…  I sure hope it doesn’t take its time about doing that! 
The BBDXY had already gained 4 index points by the time I was writing yesterday morning, and continued to rally throughout the day ending up at 1,226.84, up 5 index points on the day… The euro gave up about ¼ of a cent, and even the Russian ruble, which had been on a tear in May, gave back some of those gains yesterday.  Gold & Silver started the day down, and never got off the mat yesterday. Gold lost $16.70, and Silver lost 43-cents! Gold finished the day at $1,838.10, and Silver at $21.62…  The price of Oil came back into the hemisphere yesterday and closed the day down $3 trading with a $115 handle… And Bonds, have begun to rise again, with the 10-year ending yesterday at 2.86%
It’s time to start hearing the talk about how the Fed/ Cabal/ Cartel will hike rates again this month… I’m going to go out on a limb here and say that this next 50 BP rate hike will be their last one… They may say that they are more than ready to hike again the following month, but… I just don’t see the Fed Heads having the conviction to watch what they have created (The credit economy) go down the drain, with rate hikes, besides they will be able to point to the PCE, which we talked about yesterday, and say that inflation is already falling, and there is no need to keep hiking rates… Of course they’ll leave the door open in case inflation comes back, which it will if you ask me, but by then they’ll be so far behind inflation that they’ll never catch up, so they might as well go back to the money printing tree, and start printing money again, for stimmy checks, and other bailouts…  And the people will rejoice! They will hail the Fed Heads as their saviors, because they got a check for $1,000 in the mail…  And for a moment, they’ll forget that they just paid $10 for a gallon of gas… 
Oh, did I forget to mention that we are growing closer to the election period, and you wouldn’t want to be up for re-election, without stimmy checks in people’s pockets! 
In the overnight markets last night…  Strange things have happened, in that the dollar continued to hold its gains, but the Commodity Currencies have gained VS the dollar, sans the ruble… And Gold is up $8, while Silver is up 43-cents in the early trading today. I believe there could be some short covering going on, as we start the new month…  The price of Oil has recovered $2 of its loss in yesterday’s trading, and Bonds are stuck in the mud at 2.85%, this morning…  
OK, well I watched and listened to an interview with Nomi Prins, who is a big hot in the arena of analyst, authors, speakers, and economists… Last year she wrote a book telling us how there was a huge collapse of the stock market on the way… But she has reconsidered and now thinks that that the Fed will avoid a collapse of the stock market, and thinks like I do that they will go back to the well, and print money again… I just finished an interview with Dennis Miller for his letter: Miller On The Money, yesterday, and I’ll give you a spoiler alert, on something I talked about in the letter… It’s called ‘Demand destruction’ is the term economists use. It describes the self-correcting phenomenon: how high prices cure high prices…and why inflation will take care of itself, if it is left alone. As prices rise, people can’t afford to buy so much. Because they are poorer. So, prices fall simply because there is less demand for goods and services. Less is made. Less is consumed. Prices fall. And less energy is used. ”  
I borrowed that description from Bill Bonner’s letter, and I am telling you this now so you will hear me later… this is not going to work! The higher prices we are seeing today, will never return to what they were before… Instead higher prices we see now will only continue to go higher… This won’t happen overnight, folks, but like Chinese water torture, Prices will gradually go higher and higher until you say “uncle”… 
OK… moving on to something else… Bill Bonner talked about turbine wind mills yesterday in his letter, and he is very leery ot them being able to replace fossil fuels…  And I agree… Let’s see… what happens when the wind doesn’t blow?  Don’t we need a continual flow of energy to get through our day, we certainly can’t stop every time the wind decides not blow… Or the same can be said about solar panels… What happens when the sun doesn’t shine? Shoot Rudy, we, here in the Middle of the Country, just had the chilliest, wettest spring I can recall ever experiencing, There were multiples of days when we never saw the sun… I’m just pointing out the numbskullness of the Green Deal, and all the expense of money we don’t have to spend, that it will cost… 
I can’t say that I’ve experienced any food shortages yet… Higher prices, you bet! Of course, I have no use for baby formula, and that was the short du jour this month… Remember during the ill-advised economic shutdown, the toilet paper shortage? Well, if we didn’t have people hording TP at the time, the shortage would have been lessened… And hand sanitizer, and oh well, you get the idea here… 
So, has the Russian ruble seen the best of its days?  It certainly appears that way, given that on 5/25 the ruble was trading with a 56 handle, and since then, with nothing changing,, countries buying Russian Oil still must pay for it in rubles or Gold… But there’s something in the air that’s telling me that the ruble has seen its best days… There was this surge in the currency, and it became the currency du jour, and therefore everyone had to own some rubles, and the surge got stronger, but then the surge ended, and the ruble has lost ground every trading session since 5/25…  Interest rates in Russia are still higher than the rest of the world, but with fundamentals still on the back burner, those higher interest rates aren’t helping the ruble right now… 
But the ruble remains an “oil play”… So if you are of the opinion that the price of Oil will stay high or even go higher, then this is your currency to own… At least you get a nice chunk of rubles added to your holding every 3 months! 
I have the same concern with the British pound sterling… aka ‘the pound”, or “cable”…  after falling to a 1.24 handle a week or so ago, the pound has rallied, and there’s nothing there to tell you why it has rallied, and I’m always quite suspicious of an asset that rises and there’s no reason for it to rise… Of course that conversation could be about cryptocurrencies, NFT’s, and any other Fad that’s got people’s attention. 
 
Well, it’s June 1st, and the Fed Heads will begin, supposedly, their massive Quantitative Tightening, I have to think that this is where the cheese begins to bind for the economy, and the dollar,,, no buyers for the Treasury auctions, should make for interesting times ahead… 
The U.S. Data Cupboard today will have the ISM Manufacturing Index for May. I believe we’ll see this data continue to weaken… We’ll also see the Job Openings, and the Job Quits…  I’m fascinated by the Jobs Quits data each month, seeing that at least 4.3 Million people quit their jobs, each month.. You know, after a few months those Job Quits add up, eh? I don’t see how our economy can recover while we’re experiencing “the Great Resignation”… 
Can you blame these people that have thrown their hands in the air and say, “take this job and shove it”?  Their wages for toiling at a job that takes them away from their family, etc. can’t keep up with inflation, and they are losing ground financially with every passing day… 
To recap…  The dollar rebounded on Monday, but in the overnight markets the Commodity Currencies, sans rubles, have pushed back against the dollar, as we start a new month, with Gold & Silver on the rally tracks, and Oil pushing the envelope of higher prices… 
For What It’s Worth… Well, remember a week or so ago, when I told you about the riots in Sri Lanka over rising prices, and how that could come to America?  Well, if the people of the island nation were upset with high food and energy prices, before, they’ll probably ready to blow a gasket over the latest inflation report from Sri Lanka, and that can be found here: https://www.bnnbloomberg.ca/sri-lanka-s-inflation-surges-to-record-39-1-in-may-1.1772666
Or, here’s your snippet: “Sri Lanka’s inflation surged to a new record in May driven by costlier food and fuels, even as the island nation struggles to find a way out of its worst economic crisis.

Consumer prices in the capital Colombo rose 39.1% from a year earlier, the Department of Census and Statistics said in a statement Tuesday. That compares with a 35% gain predicted in a Bloomberg survey of economists and 29.8% the previous month.

The Central Bank of Sri Lanka, which this month left borrowing costs steady while letting previous increases to filter through the economy, had predicted price gains to touch 40% amid a shortage of essentials in the absence of dollars to pay for imports.

A sharp fall in the Sri Lankan rupee and heightened global uncertainty stoked prices. After having lost more than 40% following a devaluation in March, its currency has slowed its decline against the dollar since mid-May. 

The country battling its worst economic crisis since independence needs $4 billion this year in emergency funds but a deal with the International Monetary Fund remains elusive. Securing an aid from the IMF would require structural reforms such as raising taxes and pruning expenditure, steps that could further aggravate pain for its citizens.”

Chuck again… We used to have a saying on the margin desk, when a margin account holder would be under the required percentage of equity in their account… We used to say, “if you loved “x” stock at $80, you’ll really love it $40″…     I don’t know why I just told you that, something in the Sri Lanka story triggered my memory back to when I used to run the margin desk at a regional brokerage house.. 

Market prices 6/1/2022: American Style: A$ .7228,  kiwi .6537,  C$ .7926, euro 1.0726, sterling 1.2572, Swiss $1.0416, European Style: rand 15.5090, krone 9.3530, SEK 9.7582,  forint 366.46,  zloty 4.2780,  koruna 23.0642, RUB 63.26, yen 129.28, sing 1.3701, HKD 7.8461, INR 77.52, China 6.6686, peso 19.62, BRL 4.7422,  BBDXY 1,226.97, Dollar Index 101.87,  Oil $116.65, 10-year 2.85%, Silver $21.90, Platinum $997.00, Palladium $2,017.00, Copper $4.32, and Gold… $1,846.06

That’s it for today, and this week… I apologize for the tardiness of the letter today… I couldn’t sleep last night, and didn’t get to sleep until the middle of the night, and just couldn’t answer the bell this morning… I have no idea what was keeping me awake… Drove me nuts! Cardinals blow a lead in the 8th, but win it in the 10th, last night… Day game today, but they’ll have to dodge the raindrops to play 9… The Cardinals will head to Chicago tomorrow, to play the Cubs… A BIG rivalry… And Happy Birthday, to Jerry McCoy, daughter dawn’s husband…  Chilliwack takes us to the finish line today with their great song: Fly By Night…   I hope you have a Wonderful Wednesday and a fun rest of the week… I’ll be getting scanned tomorrow bright and early, and then I’ll get to my fun weekend!  Please Be Good To Yourself! 

Chuck Butler

The Price Of Oil Soars!

May 31, 2022

* Currencies end the week up VS the dollar

* But the dollar roars back in the overnight markets last night… 

Good Day… And a Tom Terrific Tuesday to you! How was your Memorial Day Holiday? Did you take a moment to remember someone in your family’s history that fought for our freedom? I did, and almost broke down in tears…  All my kids and grand kids were here yesterday, to celebrate the holiday. I cooked them some yummy pork steaks, and the grand kids braved the cold pool water and swam. The weather was Chamber of Commerce weather, and so, everyone had a grand day! The Rascals greet me this morning with their song: A Beautiful Morning… 

Well, with yesterday, being a holiday, and the NY Casino banks closed, one would have thought that Gold & Silver would have nothing but green lights to take them higher, without interference… But Noooooo! The European and Asian banking arms of the NY Casino Banks took up the slack, and played games with Gold & Silver all day yesterday.  Gold ended the day flat as a pancake (Head East), but at one point in the day the green lights were leading Gold higher and it climbed to $1,867, only to see that wiped out, and the sellers allowed Gold to finish the day unchanged… Silver on the other hand didn’t fare too well, and lost 16-cents on the day. Gold closed yesterday at $1,855.10, and Silver at $22.05.

The dollar, which had been sold going into the holiday weekend, finished yesterday down again, with the BBDXY at 1,221.63…  The economic data late last week was not good for the dollar, fundamentally speaking, and while I would like to think that fundamentals are a part of dollar pricing, I know better…  The real mover the last couple of trading sessions has been the price of Oil… Oil trades this morning with a $118 handle… Putting the screws to us is what this represents, folks, and if you don’t see that for what it is, then…  Well, I don’t know what to say… 

In the overnight markets last night, the dollar was bought, by the bucket full, and the BBDXY rose to 1,225 this morning… Gold is down $6 and Silver is down 20-cents in the early trading today… Why these two are down befuddles me…  But then I’m someone that think logically, and the logics tell me that Gold & Silver should be soaring right now… 

There’s a piece of information on the ruble and yuan in the Bloomberg.com this morning, so here’a snippet of that article: “The emerging multi-polar world now includes foreign-exchange markets — as China and Russia, the biggest challengers to U.S. supremacy, boost direct trading between their currencies.

Monthly volumes on the ruble-yuan pair have surged 1,067% to almost $4 billion since the start of the war in Ukraine as the two nations seek to reduce their reliance on the dollar and boost bilateral trade to overcome current and potential U.S sanctions. The spike coincides with a rally in the ruble to a five-year high against the yuan.”

I attended a Happy Hour with my former colleagues at EverBank on Friday last week, and at that event, Chris Gaffney told me something that I had not read or even heard about, and that is that the Brazilian Central Bank has been on strike for over a month now!  And that got me thinking about the Brazilian currency, the real…  The real has been on the rally tracks, all the while the Central Bank has been on strike… Hmmm… Maybe, just maybe, the don’t need a Central Bank in Brazil!  I’m just saying… 

Hey, did you hear or read about the Fed/ Cabal/ Cartel’s holdings?  The folks at www.wallstreetonparade.com spelled it out for us last week, so I’ll let them explain this to you: “the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of all outstanding U.S. Treasury Securities with 10 to 30 years remaining until maturity.”

Does that concern you? Probably not, because the total size of the Treasury market is some $22 Trillion… But, to me, this is concerning, because no one entity should be allowed to have a such a concentrated position in our financing mechanism…  The other thing that bothers me is that, while we’ve been told that the Fed Heads will simply allow bonds to mature and not reinvest, what happens if they have to sell their bonds?  Well, for that one I have an article in the FWIW section today that will answer that question, and hear me now, so you can listen to me later, you’re not going to like the answer… 

So… with the price of Oil soaring to $118, who do we blame for this? Well, if you’re part of the Government, you blame the Oil companies… But… if you’re not part of the Government, you blame the government!  That’s what I do! As a part of their Green Deal, they have basically shut down Oil production in the U.S., making us have to buy our Oil from terrorists… And do you believe for one minute that the terrorists want to give us a discount? 

The economy is on the tenterhooks, and the price of gas that we use every day, is rising and taking huge chunks out of our disposable income…  And you can thank the Government for that…   “I’m from the government and I’m here to help.”   Ronald Reagan said that those were the terrifying words known…  

I keep telling you that inflation is not just a U.S. thing… It was reported over the weekend that Eurozone inflation has hit 8.7%… And that’s true, unaltered inflation folks, no hedonic adjustment for the Eurozone… And like it was with the dollar… When there are inflation problems, the markets begin to think about rate hikes… And with the belief that the rate hikes will calm inflation, they mark up the currency…  Probably a great example of putting the horse before the cart…  And so it is with the euro, which a month ago, was heading to parity with the dollar, and now trades with 1.07 handle… 

The U.S. Data Cupboard today, has the S&P/Shiller Home Price Index for March… This data has shown home prices slipping the last few months, and I don’t expect that to have changed in March…  The data this week will be sporadic, but will culminate with the Jobs Jamboree on Friday… 

Last week’s data included a revision for 1st QTR GDP, and that revision was not a good one, with GDP hitting negative -1.5%,…  The Fed Heads preferred inflation calculator, the PCE (Personal Consumption Expenditures) slipped in April from 6.8% to 6.3%… But don’t get your hopes up here folks… this is just a blip and most likely will return to show inflation rising next month. 

To recap… The dollar continued getting sold into the holiday weekend, but has rebounded in the overnight markets of last night. Gold and Silver aren’t faring well in the early trading today, while the price of Oil soars…  Chuck is concerned about the Fed’s holdings, and what could happen if they have to sell their bonds… And inflation soars in the Eurozone… 

For What It’s Worth…  OK, I talked about this above this morning, and how it will tell you the answer to the question, of what happens if the Fed Heads need to sell bonds?  And it can be found https://www.reuters.com/markets/us/fed-carrying-330b-unrealized-losses-its-asset-according-q1-financial-statement-2022-05-27/     

Or, here’s your snippet: “The U.S. Federal Reserve is carrying $330 billion in unrealized losses on its holdings of U.S. Treasury and mortgage-backed securities as of the end of March, according to newly released financial statements showing the impact of rising interest rates on the market value of the Fed’s balance sheet.

The central bank’s holdings of nearly $9 trillion in assets still allowed the Fed to remit $32.2 billion to the U.S. Treasury in the first quarter of 2022, according to the documents.
But the losses on the Fed’s investments, an $8.5 trillion portfolio that surged higher through asset purchases designed to keep financial markets stable through the pandemic, pose a potentially tough political problem for the central bank.
Bill Nelson, chief economist at the Bank Policy Institute, said that adjusting for the appreciation in its assets the Fed had seen through the end of last year, the unrealized losses were an even larger $458 billion.
Criticized for continuing to buy assets even as the economy was well on the way to healing from the pandemic, it is now trying to reverse course and shrink its holdings, particularly of mortgage backed securities.
If it chooses to speed the process by selling some of those assets, the unrealized “paper” losses would have to be booked as a tangible hit.”
Chuck again…  All we can do is hope that things don’t get so bad that the Fed Heads need to sell bonds, instead of just allowing them to mature… 
Market Prices 5/31/2022: American Style: A$ .7189,  kiwi .6520,  C$ 7888, euro 1.0734, sterling 1.2600, Swiss $1.0428, European Style: rand 15.6143, krone 9.4170, SEK 9.7929,  forint 367.50,  zloty 4.2664,  koruna 23.0226, RUB 61.98, yen 128.00, sing 1.3701, HKD 7.8472, INR 77.63, China 6.6588, peso 19.59, BRL 4.7532,  BBDXY 1,225.87,  Dollar Index 101.69,  Oil $118.77, 10-year 2.81%, Silver $21.78, Platinum $962.00, Palladium $2,044.00, Copper $4.29, and Gold… $1,849.26
That’s it for today… Besides the rotten egg they laid on Sunday, My beloved Cardinals had a good Holiday weekend… Is there a hotter hitter in baseball right now than Paul Goldschmidt?  I’m scheduled for new scans on Thursday this week, so there will be no Pfennig on that day… I don’t believe they’ll find anything new, but, you don’t know if you don’t look, eh? I’m still all by myself at home, for 10 more days… I seem to be doing just fine though… Blackfoot takes us to the finish line today with his over 10 minute jam session of a song: Highway Song…  I hope you have a Tom Terrific Tuesday today, and please, Be Good To Yourself!
Chuck Butler

 

The Dollar Returns To the Selling Block…

May 26, 2022

* Currencies gain VS the dollar in the overnight session

* Gas Pumps get reprogrammed to accept double digit pricing! 

Good day… And a Tub Thumpin’ Thursday to one and all! How about our Blues? A HUGE overtime win in Denver last night prolongs the series, with the next game Friday night in St. Louis!  The Enterprise Center, where the Blues play, will be hopping with fans, while the Cardinals take on the hated Brewers down the street… Friday night will be a crazy night here in St. Louis! I’ll be out in my back yard, watching and switching from game to game, on my TV outside…  I am so hyped up about Friday night, that I don’t know if I’ll get through today, first! Sorry if you’re not into me talking about the sports and teams I love… I had a reader last week, cancel his subscription because he didn’t like me talking about the teams… UGH! I guess he didn’t get the memo that this is MY letter, and I’ll talk about anything I want to! And that’s That! The great Johnny Rivers greets me this morning with his song: Baby, I Need Your Lovein’
Well, the dollar wrapped a tourniquet around its recent bleeding yesterday, and the overnight markets provided that tourniquet, as the gains the dollar made in the overnight markets were not added to during the U.S. session, and the BBDXY Index ended up 1,231.95… And that tells me that it was just a dead cat bounce for the dollar… The selling of Gold & Silver continued throughout the day yesterday… Gold ended the day down $14.20, to close the day at $1,848.20, and Silver lost 23-cents to close the day at $21.96… Up one day, down the next… That’s what Gold & Silver have done this week, so far..  The euro closed yesterday’s U.S. session at 1.0699, spittin’ distance from 1.07.. A few weeks ago the euro looked like it was headed to parity with the dollar… But just like it did quite a few years ago, it reached a point, where it looked bad, and then turned around. I told you earlier this week that the futures market has the euro trading at 1.10 by year end… 
If that plays out, then the dollar is due for some weakness, because the euro is the offset currency to the dollar, and when one goes up the other goes down and vice versa… The price of Oil slipped below $110, yesterday, and Bonds stayed steady Eddie at 2.75%, after rallying strongly on Tuesday… 
In the overnight markets last night… The euro did indeed cross into the 1.07 handle, and the BBDXY Index got back to losing ground, with the index losing 2 points overnight. Gold is down in the early trading today $9.56, and Silver is also down 8-cents to start the day. Ed Steer tells me that the delivery month of May is upon us, and it could be a wild one, so let’ see where that takes Gold & Silver…  The price of Oil seems to be held in a tight range of $109-$111… And $111 is where we’ll find Oil this morning. Bonds haven’t budge much since Tuesday’s massive yield drop (bond rally), and the 10-year is 2.76% this morning… 
I received an email from a dear reader yesterday that outlined 12 prophecies about the future of our economy and country… It was scary, and this one that I’ll highlight, is just one of the 12… So, here it is, but first put away all sharp objects! “Gas prices will continue to surge higher, and many Americans will be shocked by how high they eventually go.  If you can believe it, in Washington State at least one gas station has now reprogrammed their gas pumps “to make room for double-digit pricing”…
At the 76 Gas Station in Auburn, Washington located at 1725 Auburn Way North, gas pumps have been reprogrammed to make room for double-digit pricing. In March, they still had single-digit programming.
A spokesperson at 76 confirmed to The Post Millennial that the gas pumps were reprogrammed to allocate for double-digit pricing. Although not confirming that they are expecting prices to increase up to $10.00 or more, the current trend suggests the possibility.
Supplies of fuel will continue to get even tighter in the months ahead.  Earlier today, I heard from a reader on the east coast and a reader in the middle of the country that both said that diesel is now being rationed where they live.  So far, I have not been able to confirm that this is happening on a widespread basis.”
Chuck again… So, if the gas company doesn’t believe that gas prices will hit $10, why then are they reprogramming their pumps to allow for double digit gas costs?   I have to say that this is all getting very scary folks… Food shortages, the U.N. said that we have only 6 months of wheat for the world, and Gas prices, and everything under the sun and moon getting more expensive every day, I have to think that this is all going to end up in tears for us, here in the U.S.   The rest of the world will not be doing well either, but to me, that’s their problem, and our problem is more important to me… 
The Fed/ Cabal/ Cartel’s meeting minutes yesterday told a story of the Fed Head getting very scared of the inflation that they created that they are now quaking in their shoes… Remember when the Fed Heads said that they would allow inflation to run hotter, than their target of 2%? Well, they got their wish! Of course the Fed Heads thought that could corral any higher inflation and make it go away with a wave of their hands… I’m of the opinion that they should round the Fed Heads all up and fired them, and bring in a new bunch that understands that money supply increases equals inflation… And when you print over $6 Trillion in a short time, you’re not only going to get inflation, you’re going to get runaway inflation, and all the Fed Head’s horses and all the Fed Head’s economists, won’t be able to put the economy back together again! 
Like I said a week or two ago.. That $6 Trillion has already left the barn, you can’t call it back… it’s in the economy, and not doing a bit of good, except driving up the already over valued stock market… And once the stock jockeys figure out that there’s no more money coming from the Fed/ Cabal/ Cartel, what will they do then? Sell… But then I’m not a stock jockey and don’t play one on TV, or did I stay at a Holiday Inn Express last night, so take my thoughts on that with a grain of salt… 
Is there anything in the markets that is good that I can write about? I’ve scoured the news and can’t come up with anything… Sure you’ve got your naysayers of the whole recession story, but I doubt that they really believe that what they’re saying will come true… And I question their motive at thus point in the proceedings. Do they truly believe what they’re saying, or are they being paid to be optimistic?  I have to believe that it’s the latter of those two… If you think 2008 was bad, with all the layoffs, liquidations, repos, foreclosures, and rot in the markets, then you had better strap yourself in for this bad spell that’s already beginning. 
The U.S Data Cupboard yesterday, had the Durable Goods and Capital Good orders for April, and both were disappointing to say the least… Durable Goods were .4%, and were expected to be .6%, and Capital Goods were .3% VS the 1.1% gain in March… Today’s Cupboard has the usual Thursday fare of Weekly Initial Jobless Claims , which I was telling good friend, Dennis Miller yesterday, that I believe that we’ll begin to see this data shift to adding new jobless claims each week going forward… Dennis and I were having a discussion about what industries are going to suffer the worst this summer when the wheels come off the economy… That will be the subject of a future article, given that Dennis’s health continues to improve… 
To Recap… The dollar wrapped a tourniquet around its recent bleeding yesterday… But after the overnight recovery of the dollar, there was no follow up during the U.S. session, and that tells Chuck that we should look for more dollar selling… 76 gas stations are reprogramming their gas pumps to allow double digit prices… You know like $10 a gallon?  The euro continues to recover from its low price of a week or two ago. What to invest in now, is the subject of the FWIW article today, so you won’t want to miss that! 
For What It’s Worth…  What did your grandparents do during the great depression, after Roosevelt confiscated their Gold, and then devalued the dollar? that’s the subject of this article today, that can be found here; https://www.dollarcollapse.com/wright-payment-system-fragility/
Or, here’s your snippet: “How did people in the Great Depression make payments when money, itself, went broke and gold was confiscated? What will we do today if power outages or cyberattacks take down credit-card/debit systems? Ways to be prepared …

by Robert E. Wright on American Institute for Economic Research:

In previous posts, I suggested ways to cope with rising prices (COLA) and food insecurity (wild game and liberty gardens). Inflation creates many problems, including an increased risk of payment system glitches, like the shuttering of banking and credit card networks, leaving individuals economically stranded. Cyberattacks, power outages, financial crises, and other unexpected shocks can slow, or even disable, the payment system.

True, a de facto or de jure moratorium on payments would ensue but don’t forget that if you can’t make payments, your employer and other debtors (like Social Security or retirement or investment funds) may not be able to pay you either. How, then, will you buy gas or groceries?

The most obvious way to hedge against payment system risk is to hold some cash. Many people who lived through the Great Depression stockpiled paper money for the rest of their lives, just in case their bank went under or the ghost of Roosevelt, the President who seized their gold, declared another bank “holiday.” Few of those people are left, however, and many members of our youngest adult generation go out of their way to avoid carrying cash. Even some old timers like me use paper notes only when absolutely necessary.

Moreover, it would be rather daft to hold onto much physical cash when I-series bonds are yielding north of 9 percent. That’s still a losing proposition in inflation-adjusted terms but literally better than the nothing that those limp pieces of paper pay. If you think that you’ll just saunter down to your bank and fill out a withdrawal slip like it was 1999, think again. Even if some banks remain open, they hold very little physical cash these days. Any functioning ATMs will also be quickly stripped.

Given the current rate of inflation, a better approach might be to stockpile the nonperishables that you will need. Gasoline is tricky but certainly many foods can be stocked for long periods. As long as you eat it up before it goes bad, it will actually save you money by buying now instead of after prices go up (again).”

Chuck again… remember a month or so ago when I lamented that I was holding too much cash, because there was nothing out there that I saw as a value to buy? Well, I’m still holding tons of cash, and it appears that it might be best to withdraw some of that cash and hold it in my safe at home… I do own I-bonds, but like the article says, if inflation continues to rise, those will be a losing proposition…  UGH! 

Market Prices 5/26/2022: American Style: A$ .7089,  kiwi .6471,  C$ .7801, euro 1.0710, sterling 1.2611, Swiss $1.0410, European Style: rand 15.7689, krone 9.5648, SEK 9.8820,  forint 264.98,  zloty 4.3000,  koruna 23.0289, RUB 62. 83, yen 127.08, sing 1.3745, HKD 7.8497, INR 77.57, China 6.7317, peso 19.79, BRL 4.8269,  BBDXY 1,230.31,  Dollar Index 101.85,  Oil $111.24, 10-year 2.76%, Silver $21.90, Platinum $946.00, Palladium $2,002.00, Copper $4.25, and Gold… $1,843.90

That’s it for today… I totally forgot that the Blues were going to play last night, so I didn’t watch it, and they won, so I’ll keep that in mind for Friday night’s game! I did watch the replay at midnight last night! Well, this is heading into Memorial Day Weekend! The weekend the pools open up, that is if they can find lifeguards! I’ll be giving my Big Green Egg a workout this weekend, even if I’m only cooking for myself! I plan to smoke some pork steaks, which is a St. Louis fave… Hey! if you want some fall off the bone, smokey, bar- be -que pork steaks, stop by! HA! I do believe that Andrew, Rachel, Braden and Evie, are going to stop by on Monday, so I won’t be cooking for myself!  This weekend is the unofficial start of summer, and things are going to heat up in more ways than just the temperature, so get yourself a shad tree, and cool beverage, and relax… and forget about the markets, and all the turmoil going on for a couple of days, it’ll do you some good! The Moody Blues take us to the finish line today, with their song from my fave album Seventh Sojourn: New Horizons… “Well, I’ve had dreams enough for one, and I have love enough for three”… I hope you have a Tub Thumpin’ Thursday today, and Fantastico Friday and Holiday Weekend… Please remember to Be Good To Yourself! 

Chuck Butler

Is This A Dead Cat Bounce For The Dollar?

May 25, 2022

* Currencies & metals have a good day on Tuesday… 

* A price manipulator pleas guilty! 

Good Day… And a Wonderful Wednesday to you! Well, I lost a bet… I have a good friend that lives in Toronto, Canada, and we bet on who would win the 2 game series between the Cardinals and Blue Jays, with a run differential the tie breaker… The Cardinals enjoyed a 4 game run differential after the first game, and my friend, Craig, thought that the 4 runs would be enough… I told him don’t worry, and I was right, with the Cardinals losing 8-1 last night, he won the bet… A Cold Budweiser! Firefall greets me this morning with their 70’s song: Strange Way… Not familiar with that? YouTube it, I think you’ll like it… 

Well, the dollar dominance certainly took another hit yesterday, with the BBDXY index losing 2 more index points, to end the day at 1,229…  The data from the U.S. yesterday could have something with the weakness in the dollar, as the Manufacturing Index slipped again, and new home sales dropped like a rock in April…  But, for the data to have any bearing on the dollar’s performance, we would have to be returning to fundamentals, and there’s no way, that’s happening!  So, we’ll just go with the thought that the dollar lost more ground yesterday, because it had been overbought, and the correction continued…  Oil gained $1 buck yesterday, and bonds… 

What can I say about bonds, that I already haven’t said? Bond yesterday rallied big time with a 6 basis point drop in the 10-year’s yield…  The 10-year was bought hand over fist yesterday, and the yield dropped to 2.75%…  And that begs the question, is the Fed/ Cabal/ Cartel buying bonds still?  The Fed Heads did say that they would begin their massive Quantitative Tightening in June, so that left them some breathing room to continue buying up to June, right? 

If the Fed Heads aren’t buying, then that opens another can of worms…  The Bond Boys aren’t thinking that the Fed will renege on their call for multiple rate hikes, are they?  Well, either the Fed Heads are still buying bonds, or the Bond Boys are calling them out for their lies… 

Everyone, and their brother, are talking about a recession coming to the U.S. and Big Recession, not you run of the mill recession either! When I say “everyone, and their brother, I’ talking about the people that I listen to, People like: Ray Dalio, Bill Bonner, Doug Casey, David Rosenberg, Evon Von Greyerz, Mathew Pipenberg, and others…  I certainly don’t listen to the Government, or the Fed Heads, or anyone else that speaks for the government.  So, if a Big Time Recession is coming…  Oh, well, I’ll save that for another day… 

So, a long list of analysts believe a Big Time recession is coming to America, and that Gold is the best way to combat the effects of the recession…  And that leads me to my usual question: Got Gold? 

Gold and Silver had good days yesterday with little interference. Gold gained 14.50 to end the day at $1,867.40, and Silver gained 32-cents to end the day at $22.19…  Volumes were light once again… 

In the overnight markets last night… Well, the dollar bounced back, with the BBDXY index gaining 3 points… The question now is this bounce back a dead cat bounce?  (no animals were hurt here, this is just an old markets saying)  And Gold is starting the day down… Gold is down $14 in the early trading today, and Silver has given back the 32-cents it gained yesterday, and more this morning…  With no interference yesterday, the price manipulators seem to be trying to catch up on a lost day…  I’m just saying…

Speaking of price manipulators… I saw this in Ed Steer’s letter this morning, and it’s a little long, but I think you should see this…. “Glencore International A.G. (Glencore) and Glencore Ltd., both part of a multi-national commodity trading and mining firm headquartered in Switzerland, each pleaded guilty today and agreed to pay over $1.1 billion to resolve the government’s investigations into violations of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme.

These guilty pleas are part of coordinated resolutions with criminal and civil authorities in the United States, the United Kingdom, and Brazil.
“The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor,” said Attorney General Merrick B. Garland. “The Justice Department will continue to bring to bear its resources on these types of cases, no matter the company and no matter the individual.”
The charges in the FCPA matter arise out of a decade-long scheme by Glencore and its subsidiaries to make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries. Pursuant to a plea agreement, Glencore has agreed to a criminal fine of more than $428 million and to criminal forfeiture and disgorgement of more than $272 million. Glencore has also agreed to retain an independent compliance monitor for three years. The department has agreed to credit nearly $166 million in payments that Glencore makes to resolve related parallel investigations by other domestic and foreign authorities.
Separately, Glencore Ltd. admitted to engaging in a multi-year scheme to manipulate fuel oil prices at two of the busiest commercial shipping ports in the U.S.”
Chuck again…  The reason this is so important is that, if this is going on with one company, it’s going on all over, folks… Manipulated markets, no more free trading assets… I shake my head in disgust, and you should too, for this is NOT, the way it’s supposed to work…  I’m just saying…
I already told you about the Data Cupboard yesterday, but I left out that the new home sales this month had dropped 16% from the previous month, but that didn’t affect home prices, as they continued to soar…  But, if the Fed Heads come through with their rate hikes, then home prices should be at their apex right now…  Today’s Data Cupboard has April Durable Goods, and Capital Goods Orders… I don’t expect either of these to give any indication that the U.S. economy is recovering… 
To recap… The currencies and metals continued to rise against the dollar, as the dollar dominance waned again… Gold gained $14, while Silver gained 32-cents yesterday, and the BBDXY fell by 2 more index points…  In the overnight markets, the dollar has rebounded, with Gold & Silver both giving back their gains from yesterday, and the BBDXY gaining 3 points.. Chuck also tells us about a price manipulation scheme gone bad… 
For What It’s Worth…  This is an interesting and thought provoking article, that talks about what could come after the next recession, and it can be found here: https://internationalman.com/articles/how-inflation-destroys-civilization/  
Or, here’s your snippet: “Thanks to rampant inflation, socialism could soon become irreversibly entrenched in the US—just as it is in Argentina, Venezuela, and other countries.Rapidly rising food, housing, medical, and tuition prices are squeezing Americans—many of whom do not understand the true cause of their falling living standards.

The explosion in the cost of living is a predictable consequence of money printing.

Since the outbreak of the Covid hysteria, the Federal Reserve has printed more money than it has for the entire existence of the US.

From the founding of the US, it took over 227 years to print its first $6 trillion. But in just a matter of months recently, the US government printed more than $6 trillion.

For further perspective, the daily economic output of all 331 million people in the US is about $58 billion. At the push of a button, the Fed was creating more dollars out of thin air than the economic output of the entire country.

In short, the Fed’s actions amounted to the biggest monetary explosion that has ever occurred in the US.

Initially, the Fed and its apologists in the media assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false.

As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about. When the inflation turned out to obviously not be “transitory,” they then told us “inflation was actually a good thing.”

Of course, they were dead wrong, and they knew it—they were gaslighting.

The truth is that inflation is out of control, and nothing can stop it.

Even according to the government’s own crooked CPI statistics—which understates reality—inflation is hitting 40-year highs. That means the actual situation is much worse.”

Chuck again…  Nick makes a good point here, that I’ve made a couple of times in the past, and that is this… Either the Fed Heads and all their economists that they employ, knew that their money printing was going to cause inflation and they lied about it, or they didn’t have a clue, and either way they should all be fired!  I sent that note to Bill Bonner, and he replied: “Either way…knave or fool…they shouldn’t be running the world economy! – Bill Bonner

Market Prices 5/25/2022: American Style: A$ .7063, kiwi .6456, C$ .7782, euro 1.0660, sterling 1.2494, Swiss $1.0373, European Style: rand 15.6299, krone 9.6214, SEK 9.8762,  forint 362.48, zloty 4.3200,  koruna 23.0870, RUB 56.81, yen 127.13, sing 1.3760, HKD 7.8497, INR 77.52, China 6.6765, peso 19.89, BRL 4.8194, BBDXY 1,233.95, Dollar Index 102.27,  Oil $111.27, 10-year 2.75%, Silver $21.75, Platinum $945.000, Palladium $1,998.00, Copper $4.25, and Gold… $1,852.28

That’s it for today… A little shorter than usual, but not by much… Well, I’m all by myself for the next weeks, plus… And the first night, I had a rough night with my stomach! UGH! I don’t think it was me aching for company either! HA! My chemo pills do that to me every now and then, more often here recently, and that bothers me… But then I’ve led an easier life with chemo…( compared to most)  I’m still able to eat (most things), have a cold one with friends, and go to games, etc.  I can’t do those things every day, but most days! I think that my family  & friends forget that I take chemo every night… But that’s Ok with me, because I don’t want them to treat me with kid gloves… Crosby, Stills & Nash take us to the finish line today with their song that made it on the Woodstock film: Suite Judy Blue Eyes…  I hope you have a Wonderful Wednesday today, and please, remember to Be Good To Yourself!

Chuck Butler

 

Could We See Blackouts This Summer?

May 24, 2022

* Currencies continue to push against the dollar

* Bullard talks tough… 

Good day.. And a Tom Terrific Tuesday to you! Well… I found a different laptop in my closet yesterday, only the shadow knows how long this one will last, or how outdated it is, but for now, it works much better than my old one! I spent most of the day yesterday setting up the new laptop…  It’s crazy, and I’m not even your last choice for a techie… But I soldiered through, and got my email set up, so that was a victory in itself!  I mentioned in yesterday’s brief letter that I had a good doctor visit last week… The doc said, “Your blood sugar is great, your BP is great, your Blood oxygen is great, your weight is down, and your legs aren’t swollen, keep doing whatever it is you’re doing”!  I left his office smiling like the Cheshire Cat!  Buddy Miles greets me this morning with his version of the song: Down By The River
Well… there was more selling of the dollar after I sent out my letter yesterday, and the BBDXY closed the day at 1,231.97, down 9 index points in all, on the day… I suspect that the PPT will be in soon to help the dollar out, with their Exchange Stabilization Fund… But if the dollar is really on the tenterhooks, then the PPT will only be able to stem the tide… But if the dollar was only going through a correction to all the overbought positions, then it will recover… Only the Shadow Knows which way it will go… In my younger years, I would be bold and go out on a big fat limb, and make a call on which way the dollar was going… But that was back in the day, when fundamentals ruled the roost, and it was not that difficult to see, as long as you followed the fundamentals like i did! 
So, Gold ended the day giving back some of its gains once again in the intraday trading, and Gold was only allowed to gain $6.80, to close at $1,854.50, and Silver couldn’t hold its gains ending the day down 1-cent, to close at $21.87… I have to say that while I would rather see Gold hold its intraday gains throughout the trading sessions, I can’t complain too much given that each day Gold shows gains, albeit, small ones, but gains nevertheless… 
Here’s a snippet from Ed Steer this morning: “But volumes were exceedingly light in the precious metals on Monday, so those with in an interest in pushing their respective price around, had no problems doing so. Gold closed above its 200-day moving average for the third day in a row, but not by a significant amount — and with ultra-low volume it’s not really possible to tell how aggressively the Managed Money traders, or others, might have been covering short positions. I’d guess, not much.”
Chuck again… The price of Oil was steady Eddie throughout the day, ending the day trading with a 110 handle. Bonds got sold, for the first time in about 10-days, with the 10-year Treasury yield rising to 2.85%… 
In the overnight markets last night…  Well, before I went to bed last night, I looked at what the currencies were doing overseas, and saw, at that time, that the dollar had wrapped a tourniquet around its recent bleeding, and was up a bit… But, as the night wore on, the dollar got sold again, and starts today a little less in value than what it ended the day yesterday.  Gold is up $4 in the early trading, and Silver is up 14-cents to start the day. The price of Oil remains steady at $110, and bonds got bought again last night, by someone, or some country, to bring the yield on the 10-year to 2.81%… 
Yesterday, I had this quote from James Bullard, St. Louis Fed President, all lined up and in the letter, when it played a disappearing act with me, so here you go… “Fed’s Bullard says retailers who don’t understand that consumers are stretched thin by inflation are going to get ‘punched in the face’” I guess he doesn’t realize that retailers have seen their finished goods prices rise every month, and in April, they were up 15%!  But then… what else do we expect from a Fed Head? They never saw inflation coming and now it’s the retailers fault that people are getting pinched… 
OK… Fed Heads never say what they mean, and never mean what they say… (Joe South) And here’s more proof of that… Remember when Fed/ Cabal/ Cartel Chairman, Jerome Powell, said the Fed would deliver a “soft landing”?  Well, not so fast there Tim!  He now says that no one can predict a soft landing, and that inflation is stronger than he first realized…. 
I wouldn’t touch whatever it is a Fed Head is saying with someone else’ ten foot pole! 
The Russian ruble continues to gain VS the dollar, and it has gained over 30% from its low last month, VS the dollar… You know, I’ve told you on more than one occasion that I own Russian rubles, and therefore I’ve done my due diligence… I’ve said since the beginning of the time when the old EverBank World Markets began offering ruble deposits, that the ruble was strictly an Oil play, that and the fact that they had high interest rates… Russian doesn’t have debt up to their eyeballs like most countries of the world, and they only black mark is that they invaded a sovereign nation, in Ukraine… 
Is your spider sense tingling, because mine is… Yesterday the headlines said that “Biden vows to protect Taiwan should China invade the country”…  Uh-Oh! Please tell me that someone with a cooler head will talk him out of that move, please tell me! And this is not a political statement, it’s just the deep state are war mongers, and they certainly seem to have the POTUS’s ear right now…  I’m just saying…
What would get people’s collective minds off of rising inflation, and the 10% stealth tax that inflation represents? A war… So, please, let’s all take a step back, and think about this first… 
OK… Well, European Central Bank President, Christine LaGarde told reporters yesterday that the negative rates in the Eurozone will end in September. And a first look at interest rate futures for the Eurozone shows that the markets believe that the Eurozone internal rate will be 1.10% by year-end… Not that 1.1% rates will excite everyone, but at least they will have moved off of negative, which was beginning to feel like they were going to last forever, and a day!  Euro bulls are now predicting a return to 1.10 for the euro before year-end… 
Longtime readers my recall me telling them many moons ago, that 1.10 is probably a fair and reasonable level for the euro VS the dollar. With the euro currently trading with a 1.06 handle, it’s still undervalued, hint, hint… 
Commodity Currencies in Aussie dollars and kiwi, were ratcheting up some nice gains VS the green/peachback dollar, until yesterday. So even with the dollar losing ground yesterday, A$’s and kiwi lost ground too… It must have been some profit taking by large corporations, etc. because the drops were quick and  large… 
I have a good friend, Mike, that always makes fun of me talking about how a 1-cent gain in a currency is noteworthy…  I always come to my own defense and explain that the currency market is the largest market in the world, and that large positions, multi-million like, take place every day, and when dealing with say $5 Million trade, a small gain is worth it to the position holder…  So, now you know too! 
OK.. The U.S. Data Cupboard is back on the data prints track today, with the S&P Manufacturing Index, that I talked about yesterday…  And new home sales will also print… Last week, existing home sales saw a HUGE drop in April, which was the first month with a rate hike… I can’t even begin to think about how affected the housing market will be once the Fed hikes rates two more times… 
I’ve refrained from calling what’s coming a recession… But, I do believe things are going to get really ugly, especially in housing, and house prices.. This could be 2008 all over again and I’m dead serious about that… I told you how ridiculous rents have become in Florida, right?  Memo to condo and apartment owners, better get those commitments for next winter booked, and contracts signed, before the floor caves in… I’m just saying… 
To recap… The dollar lost more ground yesterday, with the total loss in the BBDXY 9 points… Bullard is talking tough, and Powell is talking out of both sides of his mouth. LaGarde says that the Eurozone’s negative rates will end by Sept, and euro bulls have the euro pegged to go to 1.10 by year-end. The Russian ruble is now 30% higher VS the dollar, from the ruble’s low last month… Given the high interest rates in rubles, that’s quite a nice move, eh? 
For What It’s Worth… This one is leftover from yesterday, when again, my letter did a disappearing act, and I tried to reconstruct what took me 2 hours to write, and didn’t get much done… UGH! This is a scary story of what could happen this summer, folks… and it can be found here:
Or, here’s your snippet: “Tens of millions of Americans could be thrown into a summer of hell as a megadrought, heatwaves, and reduced power generation could trigger widespread rolling electricity blackouts from the Great Lakes to the West Coast, according to Bloomberg, citing a new report from the North American Electric Reliability Corporation (NERC), a regulatory body that manages grid stability.

NERC warned power supplies in the Western US could be strained this summer as a historic drought reduces hydroelectric power generation due to falling reservoir levels and what’s expected to be an unseasonably hot summer. Compound the hellacious weather backdrop with grids decommissioning fossil fuel power plants to fight climate change and their inability to bring on new green power generation, such as solar, wind, and batteries, in time, is a perfect storm waiting to happen that will produce electricity deficits that may force power companies into rolling blackouts for stability purposes.
The regulatory body pointed out that supply-chain woes are delaying major Southwest solar projects, while some coal plants have trouble procuring supplies because of increased exports. They said there’s also an increasing threat of cyber attacks from Russia.
By region, the Midwest power grid will be extremely tight. Across the Western US, power generation capacity has declined 2.3% since last summer, even as demand is expected to increase. Grids in the region may have to source power from neighboring grids as extreme heat will cause people to crank up their air conditioners. A situation of low wind speeds could trigger blackouts, according to NERC. They outlined how the Midwest could face power shortfalls due to the removal of power capacity from retiring fossil fuel power plants.
NERC issued a similar warning last year, stating power grids that serve 40% of the US population were at risk of blackouts. One year later, there was only one notable blackout last June during a heatwave in the Pacific Northwest that left 9,000 customers without power. But with reduced electricity generation capacity outpacing new green power sources, the risks of blackouts are increasing this year.​”
​Chuck again… Just because they got it wrong last year, doesn’t mean they’ll be wrong again this year, I’m just saying…
Market Prices 5/24/2022: American Style: A$ .7068, kiwi .6430, C$ .7832, euro 1.0708, 
sterling 1.2505, Swiss $1.0356, European Stye: rand 15.6727,  krone 9.6200, SEK 9.8041, forint 358.51, zloty 4.3001, koruna 23.0329, RUB 56.01, yen 127.49, sing 1.3743, 
HKD 7.8495, INR 77.56, China 6.6696, peso 19.84, BRL 4.8130, BBDXY 1,231.57, Dollar Index 102.04, Oil $110.57, 10-year 2.81%, Silver $21.95, Platinum $961.00, 
Palladium $2,005.00, Copper $4.29, and Gold… $1,868.27
That’s it for today… in my effort to get something out yesterday, after writing for 2 hours and having it disappear, I forgot to mention that it was my grandson’s birthday! Happy Birthday Braden! Man these years go by fast… My darling granddaughter, Delaney Grace, will start high school this fall! My beloved Cardinals won their game VS the Blue Jays in the bottom of the ninth with a grand slam! But sad news for our Blues… They led 1-0 at the end of the first period, and then the flood gates opened and Colorado scored 4 second period goals… Ugh… I went to bed after the second period ended 4-3…  And the Blues lost 6-3…Oldest son Andrew, Rachel, and Braden went to the hockey game for Braden’s birthday last night, and little Evie stayed with us, she’s really talking now, and quite bossy! But she knows she can’t boss me, I say NO! HA! As if!  Elton John takes us to the finish line today with his great 70’s song: Levon… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!
Chuck Butler

May 23, 2022

Good Day… And a Marvelous Monday to you! I have to apologize up front and center this morning… I had my letter all written, 2 hours of writing, and research, and my stupid computer erased it all! I’m not one to redo things, so I’m going to hit the high points, and leave out all the commentary this morning, so this will be short-n-sweet…  I have to get a new computer, this one has driven me to the edge of crazy! 

OK, the things you need to know this morning are 1. The dollar has gotten sold big time in the last two trading sessions… The BBDXY has given up 15 points in those sessions. The dollar dominance is waning, quickly…  The euro has risen to trade with a 1.06 handle, while the A$ has also risen to trade with a 71-cent handle this morning. But the Big mover of the currencies is the Russian ruble, which is now trading stronger VS the dollar than it was before the Russians started a war. 

South Africa has joined the countries that have hiked rates to combat their respective inflation… The rand is a commodity currency, and therefore to me, that is, this rate hike was warranted. 50 Basis Points were added to their internal rate which is now 4.75%…  While the rate hike was warranted, to me, it sure took some time getting here… but I guess better late than never applies here.. 

Gold is up $14 in the early trading today… On Friday, last week, Gold had climbed intra-day by $26, only to see the sellers dominate the afternoon session and bring Gold back to only a $5 gain… Gold ended the week trading at $1,847.70, while Silver gave back 13-cents on Friday, and ended the week at $21.88…  

In the overnight markets last night, Gold has added $14, and Silver has added 26-cents, so we’re starting the week off on the right foot.

The U.S. Data Cupboard is empty today, and gradually adds data prints as the week progresses, with Friday’s offerings to be the datapalooza!  Tomorrow‘s  Data Cupboard  will have the ISM manufacturing index, which has been inching downward in recent months, although it still remains above the 50 level, at 58. The recent regional reports indicate that the national ISM will drop more in April.

To recap…. The dollar dominance is taking on water… It will be interesting to see if this selling of the dollar, continues… South Africa hiked rates 50 Basis Points, and the Russian ruble is proving that if you have a commodity that other nations not only want, but need, and you price the commodity in your base currency…. The currency will respond favorably…

Market Prices 5/23/2002: American Style: A$ .7113, kiwi .6477,  C$ .7820, euro 1.0665, sterling 1.2582, Swiss 1.0342, European Style, rand 15.7219, krone 9.6073, SEK 9.8296,  forint 359.15,  zloty 4.3314,  koruna 23.0552,  RUB 57.99, yen 127.52, sing 1.3736, HKD 7.8493, INR 77.41, China 6.6468, peso 19.80, BRL 4.8804,  BBDXY 1,232.06, Dollar Index 102.17,  Oil $111.06, 10-year 2.82%, Silver $22.14, Platinum $978.00, Palladium $2,033.00, Copper $4.23, and Gold $1,861.25

That’s it for today… Sorry for the shortness, but it wasn’t user error! Tomorrow I’ll be back to being by myself for the next two weeks… Hello Pizza Man, pizza? I was happy with my doctor visit last week… My A1C was just 5.6…. The doc even removed one of my meds! My left knee is hurting bad again… The last time I asked my son, Alex, the kid with the doctorate in physical therapy about my knee he replied, “it’s just old age”.. I then said “this is what I paid for ?”…. Oh well… Don Henley takes us to the finish line with his song: Not Enough Love In The World… (he’s got that right!) I hope you have a Marveleous Monday and please remember to Be Good To Yourself !

Chuck Butler

Is A 1980’s Plaza Accord Possible?

May 19, 2022

* currencies rally for 3rd consecutive day… 

* Powell talks tough…  

Good Day… And a Tub Thumpin’ Thursday to one and all! Longtime readers know that my two oldest children, (Dawn, & Andrew) are both teachers, Dawn teaches kindergarten, and Andrew deals with high schoolers… Their last full day of school is today, and if I recall correctly, they’ll be smiling like Cheshire Cats at noon tomorrow… The Pond Scum (80’s name) have taken 2 of 3 so far from my beloved Cardinals… And a rain storm came through yesterday, and cooled down the temps for a few days… The Great Leon Russell greets me this morning with his song: Back To The Island…

Well, ever since Monday this week the dollar has been slipping, yesterday the BBDXY game up 2 index points, and overnight was even worse. More on that in a minute. I’m still not convinced that this brief dollar selloff is a long lasting trend, instead,  just a “correction”… But stocks are really getting sold these day, and a lot of those stock holdings were by foreigners, who then would sell the dollars that they just received for the sale of their stock, and convert them to their home base currency… I don’t know how much of this scenario has happened, but it’s difficult for me to believe that it hasn’t happened by the truck load…

Gold tried like the dickens to get back to flat on the day yesterday, but ended up short by $2.70, and ended the day at $1.822.20. Silver did get back to flat and more gaining 4-cents on the day, and ended the day at $21.74… The Price of Oil slipped again from its high on Tuesday of $115… And bonds continue to wallow around in the muck… I for the life of me can’t come up with a reason for an individual to buy U.S. Treasuries when the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates further…

Buying bonds now would be like a poker player calling another player’s bluff… Buyers now are going with the thought that the Fed/ Cabal/ Cartel can’t hike rates much further without getting the economy in a deep dive… That’s their story and they are sticking to it! Me, on the other hand, still won’t touch Treasuries with your ten-foot pole!

In the overnight markets last night… The dollar got sold more, and this is becoming quite interesting… The BBDXY lost 7 index points in all yesterday and last night… The euro is above 1.05, and the Russian ruble continues to rack up the gains VS the dollar. Gold is up early this morning, along with Silver, so we have that going for us today! I just talked about Treasuries, and then I look at the early morning level for the 10-year, and see that it has rallied to 2.83%… I don’t get it… but then I’m just a humble old country boy…

When I left you on Tuesday, I told you that the Fed/ Cabal/ Cartel Chairman, Jerome Powell, who has been confirmed to his second term now, was being interviewed… Well, let’s listen in on some of his interview;” Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down, saying Tuesday he will back interest rate increases until prices start falling back toward a healthy level.

“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” the central bank leader told The Wall Street Journal in a live-streamed interview. “We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down.”

“We’ll go to that point. There won’t be any hesitation about that,” he added”

Chuck again… So, like I said above, the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates… And well, I think they will soon find that their rate hike didn’t stop inflation from rising… And why’s that? Well, I told you on our Tom Terrific Tuesday… The over $4 Trillion in new money supply in the past couple of years has already been issued, spent and son on… You can’t call it back now…

I will say this though, Seniors have to be thrilled that their CD’s will be getting increased rates when they rollover… This group of people have been the hardest hit by the ZIRP (zero interest rate policy), and then they had to take another arrow when inflation began rising! I’m now considered a “senior”, and I know first hand what kind of damage my investment portfolio has taken with ZIRP, and now inflation…

I want to spend some time talking about Gold (& Silver) this morning… Sure Gold has taken on water in the month of May, but… it’s still the commodity I want to own during a war overseas, rising inflation at home, and an overbought dollar.. I saw this quote by one of my fave founding fathers, Thomas Jefferson, so here it is: “Specie (gold and silver coin) is the most perfect medium because it will preserve its own level, because having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.” – Thomas Jefferson

What a smart man Thomas Jefferson was… Many of the things he’s known to have said, are still relevant today… I’m just saying…

Like I said above, Gold has been taking on water in May… That makes it cheaper for people that has shuffled their feet, hemmed and hawed, and had to be dragged to the watering hole! That’s why it’s so darn cheap these days… Because a very small percentage of individuals actually own Gold… If they were buying physical Gold like they do stocks or Bitcoin, they’re buying power would keep the price manipulators at sea… But when your stock broker, talks you out of buying Gold, what are you going to do? Listen to your broker? Or… go rouge, and open an account with a Gold dealer, someone trustworthy, like my metals guru, Tim Smith at 1-800-926-4922…

Here’s a good fact for you… Gold doesn’t really go up in price, it goes up only because the dollar goes down, or the pound sterling goes down, etc. Oh! Did you hear about the guy in the U.K. that has decided to pay his employees in Gold instead of sterling? Here’s a quote from the Employer…

““With the cost-of-living crisis going from bad to worse,” says TallyMoney CEO Cameron Parry, “it didn’t make sense to continue offering pay hikes in pounds when its value is being eroded further with every passing day. It was like putting a Band-Aid over an open wound,” he tells local paper City A.M.

Wow! Thinking back to the early 2000’s If I had demanded that I get paid in Gold…. I’d would be singing: We’re in the money, we’re in the money,… Of course my wife would say to me: Show me the money!

The U.S. Data Cupboard will only have the usual Tub Thumpin’ Thursday fare of: Weekly Initial Jobless Claims for last week… And then some housing data that doesn’t make me tingle all over… We will see the Leading Indicators for April, with a reminder that the previous month’s print was flat as a pancake! (Head East)

To recap… The dollar is showing signs of weakness… Chuck isn’t sold on it being anything more than a correction of the dollar’s extremely overbought position…Gold lost ground yesterday, while Silver eked out a 4-cent gain. The over night markets saw the dollar get sold some more… I have an interesting article for you in the FWIW section today, so you won’t want to miss that!

For What It’s Worth….i was talking about the Plaza Accord a few Pfennigs ago, and look what the cat dragged in… An article about a potential new Plaza Accord! And that article can be found here: Surging Dollar Stirs Markets Buzz of a 1980s-Style Plaza Accord (yahoo.com)

Or, here’s your snippet:” The dollar’s skyrocketing rise has some contemplating a rare, if not unthinkable, action: major nations agreeing to manipulate the U.S. currency until it falls.

It has happened before — most notably with 1985’s Plaza Accord — which took place against a backdrop of soaring inflation, an aggressive Federal Reserve rate-hike campaign and surging dollar. In other words, a scene that looks a lot like today — a parallel that won’t be lost on Group-of-Seven finance ministers and central bank governors as they meet this week.

Demand for the greenback has been relentless this year, the result of interest rates rising quicker in the U.S. than other developed economies and the war in Ukraine prodding a stampede to the ultimate haven. The dollar’s 6.3% surge since the start of the year has clobbered the yen to a two-decade low and put the euro almost back to 1-to-1 parity with the U.S. currency for the first time since 2002. Investors are lasering on the yen tumbling to 150 per dollar and the euro falling below 90 cents as a potential line in the sand.

For Stephen Miller, a four-decade market veteran and former head of fixed income at BlackRock Inc. in Sydney, the situation now is reminiscent of his time as a young buck in Australia’s Treasury Department, where he had a front-row seat watching the Plaza Accord unfold.

Through that agreement which France, Japan, the U.K., U.S. and West Germany agreed to weaken the dollar — a stance taken out of a belief that the dollar’s huge move higher was damaging the global economy.

“One of the options down the track could be some sort of coordinated intervention,” said Miller, now an investment consultant at GSFM, a unit of Canada’s CI Financial Corp. which oversees about $289 billion in assets.”

Chuck again… While that would be a welcome sight to non-dollar holders, I just don’t see it happening, but it sure is an interesting thought, eh?

Market Prices 5/19,/ 2022: American Style: A$ .6998, kiwi .6351, C$ .7801,
euro 1.0524, sterling 1.2417, Swiss $1.0239, European Style: rand 15.9693, krone 9.7979, SEK 9.9861, forint 366.54, zloty 4.4085, koruna 23.4682,
RUB 62.26, yen 129.80, sing 1.3846, HKD 7.8480, INR 77.48, China 6.7738, peso 19.99, BRL 5.1348, BBDXY 1,147.37, Dollar Index 103.30, Oil $107.94,
10-year 2.83%, Silver $21.63, Platinum $956.00, Palladium $2,008.00,
Copper $4.23, and Gold… $1,826.89

That’s it for today and this week, of course… I’m looking forward to the weekend, as I’ll be attending a wedding… the little girl that grew up next door to us, Jordan Yanker, will be walking down the aisle and saying “I do” on Saturday… Jordan and Alex are about the same age, and they used to play together all the time, but then they grew apart as the grew up… Congrats to the parents, Kevin and Lisa… I remember when Dawn got married, I was so proud to walk her down the aisle… Geez Louise, that was 19 years ago now! Where does the time go? The Cardinals and the pond scum at noon today… A good day to sit outside and watch them! Chicago takes us to the finish line with their uber hit, that was the make out song of the 70’s… Color My World… (I used to be able to play that on the piano, but not anymore! UGH!) I hope you have a Tub Thumpin’ Thursday today and please remember to Be Good To Yourself!

Chuck Butler