February 2, 2023
* FOMC hikes rates just 25 basis points…
* BOE hikes rates 50 basis points, ECB is up next!
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, that was a wild ride on Mr. Toad’s ride yesterday… I’ll get to that in a minute… First of all I have to point out that yesterday was a real Chamber of Commerce day here in S. Florida, the weather was warm, the skies were blue, the sun shone brightly, and a mild sea breeze blew over you to keep it from getting too hot… These are the days that people come to S. Florida for in the winter… Like all those crazy New Yorkers that are moving here to escape the high taxes in their home state! Well, looky here… I’ve got Lover Boy and the headbands greeting me this morning, with their song: Turn Me Loose…
The FOMC hiked rates 25 Basis Points yesterday… CNBC is on the docket with their view of what Jerome Powell, Chairman of the Fed/ Caba/ Cartel, has to say after the 25 Basis Points rate hike announcement:
“Federal Reserve Chairman Jerome Powell confirmed Wednesday that smaller interest rate increases are likely ahead even as he sees progress in the fight against inflation as largely inadequate.
Echoing recent statements from other central bank officials and comments at the November Fed meeting, Powell said he sees the central bank in position to reduce the size of rate hikes as soon as next month.
But he cautioned that monetary policy is likely to stay restrictive for some time until real signs of progress emerge on inflation.
“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said”
Chuck again… So, Powell, also made it clear that he doesn’t not see a rate cut this year… This is my view, from the cheap seats… Powell, made it sound like he wanted a stronger rate hike, but that he was outvoted, so when the fit hits the shan later, he can deny having anything to do with it! Besides, the Fed Heads know that inflation is good for the debt of the U.S, so they don’t want to be seen doing aggressive rate hikes meeting after meeting… 25 Basis Points, is, as I’ve explained before, going after inflation with pea shooters…
So, what did this rate announcement do for the currencies and metals? It sent them higher on the day, with the BBDXY losing 9 index points, Gold gaining $22, and Silver gaining 25-cents… That’s what! The euro soared into the 1.09 handle, The Aussie dollar (A$) soared over 71-cents, and kiwi soared over 65-cents! And the rest of the currencies all booked rallies of their own VS the dollar. Gold ended the day trading at $1,951.00, and Silver ended the day at $24.05…
Why? I hear you asking? Well, it’s like this, the markets aren’t buying what the Fed Heads are selling, they believe this lower rate hike of 25 Basis Points, that brings the Fed Funds rate to 4.75%… The markets think that this lower rate hike spells that the FOMC is nearly finished with rate hike, and rate cuts wouldn’t be far behind… Yes, I know, Powell said no rate cut in 2024, but the markets aren’t buying it… They aren’t believing what Powell has to say, and they are trading in the opposite than they should…
Stocks rallied on the news… Bonds got bought, Oil got sold, and it was a “opposites day”…
In the overnight markets last night… Well, there was little follow through from the day session, but the BBDXY looks shaky… It’s flat as a pancake (Head East), and is looking like it wants to lose more ground… The euro is pushing the envelope to 1.10, and all the currencies, even yen and renminbi, are on the rally tracks this morning… Gold is up $3 in the early trading, and Silver is really pushing higher gaining 39-cents in the early trading…
The price of Oil keeps slipping further and further away from $80, and trades this morning with a $76 handle! And like I described above, the bond boys just aren’t singing from the same song sheet as the Fed Heads, and bond prices keep getting marked higher, which means the yield keeps dropping! The BOE did in fact hike rates as expected, and now we wait for the ECB…
Well… yesterday I told you about how real wages were stuck in the mud… And then in Addison Wiggin’s letter yesterday he quoted, ““The most troubling information in the GDP report,” writes E.J. Antoni at Fox Business, “is the precipitous drop in real disposable income, which fell over $1 trillion in 2022.”
“For context,” Antoni continues, “this is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression.”
The pound sterling is rallying too and has moved higher at a quicker pace than the euro… Part of the reason for that happening, is this from Bloomber.com: “The Bank of England on Thursday is likely to deliver its 10th consecutive interest-rate increase alongside forecasts underscoring the risk that inflation becomes more persistent in the UK economy.”
Economists and investors anticipate the central bank will raise its benchmark lending rate by a half point to 4%, the highest since 2008 and continuing the quickest series of hikes in over three decades.”
Chuck again… That’s a quicker pace than the one the Fed Heads were on until they opted for 25 Basis Points hikes… And certainly much faster than that the European Central Bank is on…
Chuck again, and the BOE did in fact hike rates 50 Basis Points this morning… Now, we wait to hear what the European Central Bank (ECB) does… My thought? I think they too will hike 50 Basis Points this morning… The ECB got a very late start to the rate hiking, so they have to play catch-up… And should be good fuel for the euro…
I’ve said this before, and I’ll say it again, I’m no fan of the green folks, and their agenda… I have a problem when people say that they can control the climate… Really? Give me a break! Mother Nature handles that department, and don’t send me your thought otherwise, because I’m not changing my view! The cost to Americans to implement these green programs will be astronomical, and put great pains on the U.S. consumer, and all the while, we will not be any better climate wise… So… why spend the money? The money you don’t have?
I found this link to a YOTUBE from a dear reader (Thanks Keith!) and it spells out the ridiculousness of the Gov’t’s goal to move to 100% electric cars… You can choose to skip this, I don’t care, it’s no skin off my back, but if you do choose to watch and listen to this here it is: https://www.youtube.com/watch?v=nZZH3aNl5ZE
Before we head to the Big Finish this morning, I came across this quote, that I thought hit the nail on the head, bang on! Check this out: ““We now live in a nation where doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals, and our banks destroy our economy ” – Chris Hedges
The U.S. Data Cupboard yesterday, had the FOMC announcement… In addition, the ISM Index (manufacturing) fell further in Jan. to 47.3%… it just keeps moving further away from the 50 level… We also saw that there were 11.1 million job openings, and 4.1 Million job quits. And then finally, the ADP Employment Report showed a HUHE drop this month from last month… Last month ADP showed that 253,000 jobs were added the previous month, and now yesterday, last months’ jobs added were only 106,000… The ADP report is supposed to be a clue to what the BLS report will be tomorrow… But, as I’ve chronicled in the past many times, the BLS uses their own magic potion to come up with the Jobs created number…
To recap… The FOMMC hiked rates 25 Basis Points, and said they wouldn’t cut rates for the rest of this year, and the markets… They didn’t believe the Fed Heads, and traded everything as if the Fed HAD cuts rates… Gold soared, the dollar got sold, bonds soared, Oil got sold, and stocks rallied.. Chuck calls it an opposites day… The Bank of England is expected to hike rates this morning, and they aren’t playing games with interest rates. Interest rates in the U.K. are moving higher at their fastest pace in decades! Chuck doesn’t like green… and Chuck is no fan of people who think they can control the climate…
For What It’s Worth… Well, I know that I have ticked off many of you through the years, with my dislike of cryptocurrencies, calling them a Ponzi Scheme, and pointing out that there is nothing behind them, not even a government… I was ready to crow when FTX bit the dust, and all the shenanigans that were played with client money there, but I didn’t… But now there’s this and this really points out the Ponzi Scheme scenario that I’ve talked about… the article can be found here: Celsius Propped Up Its Own Crypto Token With Customer Funds (gizmodo.com)
Or, here’s your snippet: “Before it eventually imploded, the crypto lender Celsius Network promised users it would not be any regular bank—no, it would be bigger than a bank—and users could “unbank” themselves by funneling some of their funds to Celsius. Users would gain interest while Celsius would gingerly handle your crypto for you, investing it to generate income. Of course, it didn’t work out that way for the thousands of people whose crypto was locked up by the company when it declared bankruptcy. Now a new report from an independent investigator looking into the exchange said that Celsius was using customer and investor funds to prop up its own base and pay for other users’ withdrawals, much akin to a Ponzi scheme.
In a massive 689-page report filed Tuesday, an independent examiner said the bankrupt network was taking both investor money and customer funds and was using both to shore up the price of its native token CEL. In that time, co-founders Alex Mashinsky, Daniel Leon, and Nuke Goldstein sold millions of dollars worth of that token each over the last few years, up until the point the company declared bankruptcy. Mashinsky made at least $68.7 million in sales, more than had previously been alleged. Leon sold at least $9.7 million worth of CEL while Goldstein made out with $2.8 million, according to the report.
Last September, Judge Martin Glenn from the New York southern district bankruptcy court appointed Shoba Pillay, a former U.S. prosecutor and partner at the international law firm Jenner & Block, to report on how the lender managed customer funds and its own crypto holdings. She was also asked to identify if any of Celsius’ activities were anything close to a Ponzi scheme.
The document also describes just how many times Mashinsky along with other execs misled and lied to Celsius customers about how much CEL the company bought and sold, often fearing the community would be “upset.” In 2020, the company bought up a ton of CEL tokens “for the purpose of increasing CEL’s price,” according to the document.”
Chuck again… court appointed man, added: “Celsius effectively acted as a Ponzi scheme, borrowing from an unwitting Peter to shove crypto in Paul’s pockets.”
Market Prices 2/2/2023: American Style: A$.7124, kiwi .6515, C$ .7528, euro 1.0894, sterling 1.2309, Swiss $1.1000, European Style: rand 17.0296, rand 9.9820, SEK 10.3311, forint 362.06, zloty 4.2782, koruna 21.6812, RUB 70.12, yen 128.72, sing 1.3067, HKD 7.8432, INR 82.18, China 6.7240, peso 18.53, BRL 5.0207, BBDXY 1,213.73, Dollar Index 101.09, Oil $76.14, 10-year 3.40%, Silver $24.44 Platinum $1,022.00, Palladium $1,675.00, Copper $4.11, and Gold… $1,954.14
That’s it for today and this week… I put in a full week of writing for the first time in 6 weeks! Crazy eh? My beloved Mizzou Tigers . They are on a roll and are hotter than a firecracker with their 3pt shooting… You live by the 3, you can also die by the 3… I’m just saying… Today is Groundhog Day… One of my all-time fave movies too! Punxsutaawney Phil did see his shadow this morning, thus forecasting 6 more weeks of winter… Well, that’s important to the folks north of the Mason Dixon Line… Not for me down here in the South! I used to have a young lady that worked for me, many, many years ago, who really got into Groundhog Day, and used to have a big party to celebrate it! Well, I’ll be alone for the next 4 days, as my wife goes north to be with our daughter and granddaughter, as Delaney Grace performs dance routines at the Wide World of Sports in Orlando… No worries, I wear my Apple Watch, all the time, so if I fall the watch will call 911… I’m sufficiently recovered from my stroke, so I foresee no problems! Edwin Starr takes us to the finish line today with his song: 25 Miles … Now that’s a good old one! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… And please, please, please, Be Good To Yourself!
Chuck Butler