February 7, 2023
* Currencies & Metals get sold on Monday…
* RBA hikes rates a 9th time!
Good Day… And a Tom Terrific Tuesday to you! Well, Kathy returned from her mini-trip to Orlando to watch our darling granddaughter dance at Disney’s Wide World of Sports…. So, I was able to navigate my way through the days without incident! I’m a big kid now! HAHAHAHA! Both Mizzou an SLU are playing basketball games tonight at the same time, different channels… UGH! I’ll have one on the TV and the other on the iPad… That cold front that went through over the weekend, was nasty, the temps didn’t really change tha much, but wind, and rain, and ugly skies filled the days… But that’s gone now, and we’re back to sunny warm days… 8 days until pitchers and catchers report at Roger Dean… I’m starting to get that feeling… like a kid at Christmas… Journey greets me this morning with their song: Who’s Crying Now?
The dollar buying continued yesterday, and all the gains the currencies had booked since Rocktober, have basically been wiped out.. The BBDXY gained 8 index points on the day, as the dollar pushed the euro, and other currencies back down… This is the 3rd time in the past 2 years, that we’ve seen the dollar teetering and ready to enter a long term down trend, only to be pulled out, by the PPT and the Exchange Stabilization Funds… Fool me once, fool me twice, and now fool me a 3rd Time… I’m not suited for this any longer… I came from a day when there were no things like ESF’s and Price manipulators… I’ll never get used to seeing things going one way and then having them reverse their direction on dime!
So… The dollar continued its ascent yesterday… Gold, which was up $8 early in the day, was only allowed to gain $5 on the day, while Silver never found a bid yesterday and ended the day in the red… Gold ended the day at $1,870.00, and Silver ended the day at $22.35. The price of Oil gained a buck yesterday, and ended the day trading with a $74 handle.
The 10-year’s yield continued to rise yesterday, ending the day at 3.65%… Have the bond boys finally thrown in the towel, and said, “we believe you now, Jay”? Just last week, the bond boys were insisting that the Fed Heads were going to pivot an reverse their rate hikes, and bought bonds… But now less than a week later, they are reversing those buys… Makes you wonder just what kind of losses are at stake here?
In the overnight markets last night…. Things calmed down a bit, the dollar buying stopped, as everyone took a step back to see what damage had been done. The BBDXY was flat as a pancake (Head East), last night, and Gold is basically flat as we start the day today. Silver on the other hand is down 15-cents to start the day today… Bonds are steady, and the price of oil has bumped higher by another buck and trades this morning with a $75 handle…
So… The U.S. is in a pickle here folks… I’ll let Bill Bonner explain: “While the politicians are preparing a mock showdown over the budget, the Fed is putting on a spectacle of its own. It’s pretending to ‘hold the line’…firmly and resolutely promising to fight inflation until inflation has no fight left in it. Two percent is the limit. No more. No less. (Where that comes from, who knows?) And the Fed will continue to raise interest rates, perhaps only by ‘baby steps,’ until inflation bows down, bends its neck and offers its sword to the Federal Open Market Committee…”
Chuck again, or will it? And here’s something that’s been rattling around in my head since the U.S. began its “alternative measures” spending… While we’re here, the U.S. Gov’t can not spend any additional amounts, they can’t issue new Treasuries, and they can’t pass Go… So, let’s just say, we get all the way own to June, when the “alternative measures” run out, and then in a last second back room deal, the House and White House agree to raise the debt ceiling… Now 4 months worth of Treasury issuance will come out of the blocks screaming for buyers… But… there are few… Uh-Oh!
Here’s phone call that might take place… “Hello? Yes, is the JPMorgan? Yes it is, how can we help you? This is the Treasury Sec. Yellen, and we have a problem, Houston… Seems we have tons of Treasuries to issue to get us up to date with spending, and we have no buyers… So, you being a Primary Dealer, you are required to buy an slack in the auctions, so… How many bonds can I put you down for? JPM responds, “But we’re up to our eyeballs now with Treasuries, we don’t need any more, please don’t’ make us take them on”… To which, Yellen responds, “buck up big boy, desperate times call for desperate measures”…
That phone call was brought to you by the mind of Chuck….
Could that be the reason the bond boys are finally marking down bond prices (raising yields), for they know that the bond market will be flooded with new issuance in a month or two, and that yields will need to be higher to attract buyers? Probably… The bond boys are know to be forward thinking…
Both the European Central Bank and the Bank of England hiked rates 50 Basis Points last week, and both said that “there was more to come”… The ECB has quickly taken their rates from negative to 2.50%, while the BOE has steadily seen their rates climb to 4%… Both are adamant that more rate hikes will be needed to curb their respective inflation rates… Recall that the Fed/ Cabal/ Cartel hiked rates just 25 Basis Points last week to move their internal rate to 4.5%… Don’t look now, but the BOE is gaining on you!
I’ve been holding my breath trying not to let myself get out of hand, with the talk about the Chinese balloon… I can’t believe that we as Americans accept the fact that the Leader of this country allowed a spy balloon to just float above the U.S. sending back to China what it thought was important, and not do a think about it, until it was finished with its reports, and out to sea…
Ok… well the Swiss are at it again… Recall that I told you that in their country, if they get enough signatures on an issue, then the country is required to vote on it… And so it is with the newest issue and that is to make Switzerland a cashless society… Well, they may have the signatures for a vote, but I doubt the rest of the country is going to go that route… Here’s Reuters with their view on it: “Swiss citizens will get the chance to try to ensure their economy never becomes cashless, a pressure group said, after collecting enough signatures by Monday to trigger a popular vote on the issue.
The FBS (Free Switzerland Movement) says cash is playing a shrinking role in many economies, as electronic payments become the default for transactions in increasingly digitized societies, making it easier for the state to monitor its citizens’ actions.
It wants a clause added to Switzerland’s currency law, which governs how the central bank and government manage the money supply, stipulating that a “sufficient quantity” of banknotes or coins must always remain in circulation.”
Chuck again… I like that stipulation… Too bad we can’t get something like that from our group of knuckleheads, er, I mean, Lawmakers…
Last night, the Reserve Bank of Australia, (RBA), hiked rates for the ninth time, this time by 25 Basis Points to lift rates to 3.35%… This move has given the A$ a lift, after its sell off last week… Like I said yesterday, the players have to stop pick up the pieces of this price manipulation… I should have said, they had to pick up the pieces and put Humpty Dumpty back together again… but there, I said it!
Today’s U.S. Data Cupboard only has the preliminary trade Deficit, for last month, and Consumer Credit (read debt). Not much to pick over here… We will get to hear Fed/ Cabal/ Cartel Chairman Jerome Powell, speak in Washington… this should be interesting, because we will be among the wolves (Elites), so his talk had better be watered down from his announcement after the last rate hike, when he adamantly expressed his view that rates were going higher to combat inflation.
To recap… The dollar buying continued yesterday and the currencies gains of the last couple of months have been wiped out in 3 days of price manipulation… The RBA hike rates last night, their internal rate is now 3.35%. Chuck was thinking the other day about this shut down of Gov’t deficit Spending, and no issuance of Treasuries to finance that debt, and guess what? He shares his thoughts with us this morning on that situation, so you wont’ want to have missed that!
What It’s Worth… The good folks at GATA sent me this snippet of an article that is on the Financial Times web site. Normally, the FT blocks you from reading stuff if you don’t pay their subscription price, but for some reason this one slips through, and you can find Nouriel Roubini talking about the dollar and the alternatives here: A bipolar currency regime will replace the dollar’s exorbitant privilege | Financial Times (ft.com)
Or, here’s your snippet: “The U.S. dollar has been the predominant global reserve currency since the design of the Bretton Woods system after the second world war. Even the move from fixed exchange rates in the early 1970s did not challenge the greenback’s “exorbitant privilege.”
But given the increased weaponisation of the dollar for national security purposes, and the growing geopolitical rivalry between the west and revisionist powers such as China, Russia, Iran, and North Korea, some argue that de-dollarisation will accelerate. This process is also driven by the emergence of central bank digital currencies that could lead to an alternative multipolar currency and international payment regime.
Sceptics argue that the global share of the U.S. dollar as u nit of account, means of payment, and store of value hasn’t fallen much, despite all the chatter about a terminal decline. They also point out that you can’t replace something with nothing — as former U.S. Treasury Secretary Lawrence Summers put it: “Europe is a museum, Japan is a nursing home, and China is a jail.” …
These points may once have had some validity, but in a world that will be increasingly divided into two geopolitical spheres of influence — namely those surrounding the U.S. and China — it is likely that a bipolar, rather than a multipolar, currency regime will eventually replace the unipolar one. “
Chuck again… There was a time many years ago, when Frank Trotter and myself, contacted Nouriel Roubini, and inquired about a mutual relationship with writing, he told us he was interested, and would get back to us… I don’t believe he ever did, but I won’t hold that indiscretion against him, he’s a great mind, and sees things before others ever even get a hint…
Market Prices 2/7/2023: American Style: A$/6926. Kiwi .6310, C$ .7446, euro 1.0746, sterling 1.1986, Swiss $1.0785, European Style: rand 17.6403, krone 10.4029, SEK 10.6364, forint 368.11, zloty 4.4453, koruna 22.2612, RUB 70.89, yen 132.08, sing 1.3262, HKD 7.8483, INR 82.70, China 6.7882, peso 19.11, BRL 5.1499, BBDXY 1,241.01, Dollar Index 103.61, Oil $75.36, 10-year 3.64%, Silver $22.20, Platinum $970.00, Palladium $1,585.00, Copper $4.03, and Gold… $1,868.63
That’s it for today… The weather here will turn back to normal this week… sunny, 80, all day… Then another cold front comes through this weekend… We’ve had more of those this winter down here than I recall, but then I’ve only been coming down here for the winter for 7 years… Snow Bird, is what they call me… But in truth, I’m a cold weather bird… I’ve said it for as long as I’ve been writing this letter: I’ve got to go where it’s warm! Go Mizzou!, Go SLU! 8 days until pitchers and catchers report… Powell’s speech today should be a good one, since he’s in the den of wolves… Pink Floyd take us to the finish line today with their song: Wish You Were Here… I do wish a lot of people were here… not everyone, just a lot of people… I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!
Chuck Butler