Rocktober 12, 2021
* Gold & Silver trade flat on Monday…
* The dollar sees some slippage in the overnight markets…
Good Day… And a Tom Terrific Tuesday to you! With 4 post season baseball games on the docket yesterday, I was prepared to hunker down and sit out the rain filled day, watching baseball… But then the first game of the day was cancelled because of rain, and that just messed me up for the rest of the day! I’m a schedule follower, in case you didn’t know, and once I’m thrown a curve on the schedule, I can’t adjust to take the pitch to right field… Talk about day and night! Sunday was very warm in the mid 80’s, sunny and blue skies, and Monday was as I said rain filled, with loud thunder, and damaging winds in places… I’m hoping that we get back to sun filled skies so I can get outside to read today… Led Zeppelin greets me this morning with their classic rock song: Kashmir… My former colleague, Mike Meyer, this song was one of his fave songs…
What on earth is going on here? The dollar got bought by the bushelful yesterday, and never looked back… The BBDXY, which started the day at 1,164.39, ended the day at 1,167.13… The Japanese yen is taking the brunt of the selling VS the dollar, as it has fallen in the past two days of trading from a 111 handle to a 113 handle… Why on earth, would traders, and investors buy dollars in the face of yet another Spendalooza that’s sure to be coming down the pike, after the debt ceiling was raised for the 79th time! That’s right, 78 times before this time, Congress raised the debt ceiling… Which gives Congress the ability to pass all the pork and fat and spending programs that won’t have any ROI, and will most likely become permanent in draining funds from the coffers… And probably 1/2 of the 78 times they played out the drama card to the hilt… Oh, No! We Can’t Default, what will the other countries think of us? Treasuries are the bedrock of finance, they can’t be left to default! And all the other cries of desperation they could think of they pulled out of their hats!
But… I guess traders and investors think that with more spending, and more debt, that the economy will recover quicker… Well, if you did your homework I assigned yesterday, you now are prepared to tackle this question… What in the $3.5 Trillion is going to lift the economy out of its doldrums and return it to the high flying economy it was before the pandemic? Did you know that the previous $1.1 Trillion spending bill that was to go to pandemic expenses, hasn’t even been spent yet? And they need more money? Give me a break! These morons in D.C. think… “What the hell, why don’t we test the waters for deficit spending, and see what sticks?” If the $.3.5 Trillion is passed as is, that would bring our deficit spending in the past year to $6 Trillion dollars!!!!!! So, go ahead and buy dollars you doofuses, I hope you hold them all the way down the slippery slope of collapse!
So, the dollar was bought, bonds were on holiday, stocks got sold, Oil lost a buck, and Gold was sold by $3.30 and Silver by 10-cents… Gold closed the day at $1,754.80, and Silver closed at $22.65…
In the overnight markets last night… There had to be come profit taking here because the dollar slipped from the lofty number in the BBDXY from 1,167.13, to 1,165.81 this morning… I have to think that the dollar buying hit a crescendo yesterday… Gold is up $9.20 in the early trading this morning. Yesterday’s price action in Gold & Silver was very lacking volume… Ed Steer called it “a day of watching paint dry”… I saw that and though, damn, I wish I had thought of that! HA!
Alrighty then, what to talk about, what to talk about? Well, let’s take a short trip down south, and I mean way down south, in Brazil! On Friday last week, Brazil announced that inflation had increased 10.25% from a year ago… The Bank of Brazil must have been very stealth-like in announcing that they had raised interest rates 425 Basis Points (4.25%)… since March in an effort to slow inflation brought on by the reopening of the economy. However, rising energy bills due to a severe drought and spiking commodity costs have pressured prices further.
So, now we have 3 Central Banks that have raised interest rates to fight their respective country’s rising inflation… These Central Banks should be given a gold star for not being fooled into believing that the rising inflation was only “transitory”…
So, who will be next to take the plunge into rate hikes? It appears that the Bank of England (BOE) is contemplating a rate hike that could come as soon as the next meeting… WOW! Well, I know for one, it won’t be the Bank of Japan (BOJ), for the BOJ is finally getting what they’ve wanted for years, and that is a weaker yen, that would allow inflation to be imported into Japan, and maybe, just maybe because you never know, would finally put an end to the deflation Japan has been in, for over 2 decades…
With all this dollar buying going on, one would think that the Chinese renminbi with all their potential defaulting in the country hanging over them like the Sword of Damocles, would be getting weaker… But that’s not happening… And any renminbi strength is reflected in Singapore dollar strength… So, those two currencies have that going for them!
Each week Prager University, sends me a link to a quick 5-minute video on subjects that are wide ranging. Yesterday’s video was Stephen Moore, economist for Freedomworks, talking about debt… It was very interesting and nothing new to me, but… in case you’re interested in hearing someone else’s opinion on debt, here’s the link, it’s free… The Bankrupting of America | PragerU
The video last week was on Social Security… Here are couple of “fun facts” about Social Security… 1. When the program was introduced in 1935, the ratio of workers paying into the program to retired folks was 159/ 1… Here and now the ratio has dropped to 2.8/1… And the numbers keep dropping… And 2. 53% of baby boomers have no retirement savings… Are these people seriously thinking that Social Security will be all they need to retire? I sure hope not!
Well, all the new deficit spending that we’ll be seeing here in the U.S. will bring about the need to issue more Treasuries to finance that debt… I do believe that by the time I sitting in my seats at Roger Dean Stadium in Jupiter Florida, watching my beloved Cardinals at spring training, that the yield on the 10-year Treasury will be 2% or higher…
I saw a news report yesterday. I try to avoid news reports because they no longer just give us the news and allow us to decide on how we should view it, instead, they give us their opinion, on the news, as if that’s the only opinion we can handle… News reporters have become so opinionated and full of themselves, that I can’t stand to watch it… But last night I did watch one, because it caught my attention… And that is that since most toys are made in China, and the distribution chain from China has seen some major delays, that Christmas might not have as many toys available and the ones that are available will be more expensive… Better get shopping now, folks…
The U.S. Data Cupboard today is still lacking… We will see the Small Business Index, the current Job Openings and something new… it’s call the median expected 3 year inflation rate… We can’t decide what inflation rate indicator we should use currently, how in the hell can we figure out what is expected in 3 years? For those of you keeping score at home, the expected inflation rate in 3 years is 4.25%… Don’t worry about remembering that one, as it won’t be any where close to the expectation 3 years from now…
To recap… It was a day for the dollar and dollar buyers yesterday, and Chuck can’t figure out why on earth the dollar is getting bought! It was a holiday for the bond market yesterday, but Chuck thinks that with all the new debt, and thus all the new Treasury issuance, that yields will continue to go higher… Brazil’s inflation rate hits 10.25% last month, and the Bank of Brazil has hiked rates 425 Basis Points to fight inflation, with no results so far… Chuck points out that the Bank of Japan will NOT be hiking rates to fight inflation… And in the overnight markets… there’s been some slippage in the dollar, and Gold is up $9.20… So far this morning things are moving in the right direction…
For What It’s Worth… I had two articles lined up for today’s FWIW… One is CFTC Chairman, Gary Gensler talking about how tough he’s going to be with regulation. And the Second one is featuring Mamie Diamond of JP Morgan talking about Bitcoin… I flipped a coin and decided that the since I don’t talk about Bitcoin very much that I would feature what Mr. Diamond had to say about it, and that article can be found here: JPMorgan’s Dimon blasts bitcoin as ‘worthless’, due for regulation | Kitco News
Or, here’s your snippet: “NEW YORK (Reuters) – Jamie Dimon, JPMorgan Chase & Co chief executive, said on Monday at a conference that cryptocurrencies will be regulated by governments and that he personally thinks bitcoin is “worthless.”
“No matter what anyone thinks about it, government is going to regulate it. They are going to regulate it for (anti-money laundering) purposes, for (Bank Secrecy Act) purposes, for tax,” Dimon said, referring to banking regulations in a conversation held virtually by the Institute of International Finance.
Dimon, head of the largest U.S. bank, has been a vocal critic of the digital currency, once calling it a fraud and then later saying he regretted the statement.
This summer, JPMorgan gave wealth management clients access to cryptocurrency funds, meaning the bank”s financial advisers can accept buy and sell orders from clients for five cryptocurrency products.
Stating that his views are different from those of the bank and its board, Dimon said he remains skeptical.
“I personally think that bitcoin is worthless,” Dimon said. “I don”t think you should smoke cigarettes either.”
“Our clients are adults. They disagree. If they want to have access to buy or sell bitcoin – we can”t custody it – but we can give them legitimate, as clean as possible access.”
Chuck again… I liked the quote about how he didn’t think people should buy Bitcoin, but then he also doesn’t think people should smoke cigarettes” Read that again and think about what he’s saying folks… And quite frankly, I’ve not been a fan of Mr. Diamond through the years, and have thought that he should have seen the inside of a cell many times, due to all the findings of illegal activities at his bank… So… I was surprised as anyone to see this article, and include it in my letter…
Market prices 10/12/2021: American Style: A$ .7379, Kiwi .6964, C$ .8028, euro 1.1555, sterling 1.3634, Swiss $1.0771, European Style: rand 14.9371, krone 8.5321, krone 8.7462, forint 311.39, zloty 3.9633, koruna 21.9559, RUB 71.73, yen 113.43, sing 1.3555, HKD 7.7811, INR 75.50, China 6.4441, peso 20.78, BRL 5.5163, BBDXY 1,165.81, Dollar Index 94.30, Oil $80.84, 10-year 1.60%, Silver $22.68, Platinum $1,012.00, Palladium $2,268.00, Copper $4.32, and Gold $1,764.00
That’s it for today… I actually sat through, and watched a full NFL game on Sunday… That’s the first one in over 2 years! If I watch any NFL it’s on the Redzone channel, where you just get the highlights of the games… Well, the NHL’s season is kicking off this week… Sure seems to be early to me, but how else are you going to get 82 games in before playoffs? I still get chills thinking about our Blues, and their Stanley Cup run in 2019… Let’s Go Blues! I’ve adopted the Chicago White Sox as my team to root for, since Tony LaRussa is their manager. I was very upset with myself yesterday morning when I stepped on the scale… I had thought that I had gains a few pounds while on vacation, but 10 lbs? I’ve got to get back to work on losing it again now! UGH! Sugar Ray takes us to the finish line today with their song: Every Morning… I hope you have a Tom Terrific Tuesday, and please… please.. please, Be Good To Yourself!
Chuck Butler