September 7, 2021
* jobs disappoint on Friday, but dollar rallies last night!
* Who will step up to buy our Treasuries when the Cartel drops out?
Good Day… And a Tom Terrific Tuesday to you! How was your Labor Day Holiday weekend? Mine was full of family, food, and baseball… Saturday it rained off and on all day, but I had a large umbrella over my Big Green Egg, as I had it smoking a pork but, that took 12 hours to cook to the temp I needed it to get to… It was quite yummy to eat on Sunday! The weather here has turned to almost like fall-like weather, which I’ve always said, that the fall weather, is the best weather we get here where I live, 9 months a year. Well, my beloved Cardinals might as well begin packing their golf clubs into their cars, because they’re not going to make the playoffs, and they have 26 games remaining in the regular season… UGH! When they pitch, they don’t hit, when they hit, they don’t pitch, It’s been like this all season long… R.E.M. greets me this morning with their mega hit song: Losing My Religion… Which is what I was doing Sunday when the Cardinals blew a 4-run lead in the 9th inning!
Well, the global markets were open yesterday, but with the U.S. closed, there was little volume to speak about… On Friday last week, the markets got a jolt when the Jobs Jamboree only produced a number of jobs created in August of 247,000… The so-called experts were expected 720,000 up from the early weak forecasts of 600,000… I took the following from Ed Steer’s Saturday letter:
“The labor market recovery hit the brakes this month with a dramatic showdown in all industries,” said Daniel Zhao, senior economist at jobs site Glassdoor. “Ultimately, the Delta variant wave is a harsh reminder that the pandemic is still in the driver’s seat, and it controls our economic future.”
Chuck again… And of the 247,000 jobs that were reported for August, 142,000 of them were created out of thin air by the BLS… So, the actual numbers from the surveys only reflected 105,000 jobs created… Well, needless to say the markets received a major jolt, and awakening if you will, of the problems that still lie ahead for this economy…
So, what does that mean for the Cartel, and their wanting to begin tapering by year end? Well, one awful jobs report doesn’t make a trend, so we’ll have to see what the next couple of months bring us in the way of Jobs reports before we know for sure what the Cartel is thinking… I would say though that this report did cause them reason to pause…
And the dollar got sold on Friday, the BBDXY was 1,143.83 on Thursday morning… By the time they closed the books on Friday afternoon the BBDXY had fallen to 1,139.86… The euro was nearing 1.19, the Aussie dollar (S$) traded through 73-cents into the 74-cents handle. And all the other currencies came in line behind the Big Dog euro. Gold & Silver had big rallied on Friday, but then the price manipulators came in capped their gains… Gold gained $18 on the day, and closed the week at $1,827.60, and Silver gained 78-cents on Friday to close the week at $24.67
Those price manipulators really ticked me off on Friday… I was sitting here watching Gold tick higher and higher throughout the day, and then suddenly, the higher moves stopped, and the price began to back off… It wasn’t profit taking because the moves downward came in chunks… But I can’t do anything but call them out for their shenanigans, so I’ll just move along, and not let them bring me down it’s only castles burning, just find someone who’s turning, and you will come around (Neil Young)
In yesterday’s low volumes Gold gave back $4.60 and Silver gave back 2-cents… Gold closed yesterday at $1,824.00 and Silver closed at $24.65… The BBDXY came back to 1,140.80 from 1,139.80 on Friday, but the upward moves the currencies made VS the dollar on Friday were not wiped out completely, just some downward movement that’s all…
In the overnight markets last night…. Well, the dollar rebounded big time in the overnight markets, last night… The BBDXY rose to 1,143 from its close yesterday of 1,140… The euro which was knocking on the door to 1.19 on Friday, has given back a chunk of its gains, and don’t look now but Gold & Silver really is starting the day in the red… Gold is down $12.50 this morning and Silver is down 39-cents… What on earth did the foreign markets see that would cause them to buy dollars? I’ll try to find out more for tomorrow’s Pfennig…
So, just quick recap of the data prints last week… 99% of them were disappointing and didn’t meet expectations… Has the “high” from the free coke, I mean money worn off? Or, as I’ve been trying to press upon… The stimulus that was passed through saw most of it go to Wall Street, and very little to the common man and woman trying to pay their bills… It’s a shame, but it’s true, it’s tru, I did see a putty tat! So, how can the so-called experts think that the U.S. economy was going to keep moving in the direction it saw for most of the last 12-months, as truck loads of Gov’t spending boosted the GDP data…
Any-old-way… The Russian Central Bank isn’t falling for the Jedi Mind tricks of the Cartel, and they don’t believe that inflation is “transitory”… In fact… Let’s listen in to what the Russian Central Bank had to say about inflation… “Russia’s central bank says a new financial crisis on the scale of the 2008 collapse could happen in less than 18 months if global inflation is not kept in check.
A surge in public and private sector debt levels during the recovery from the pandemic could cause the global economy to “deteriorate drastically and rapidly” if the US Federal Reserve has to jack up interest rates to quell inflation, the Bank of Russia warned in its annual monetary policy forecast.”
Chuck again… The price of Oil continues to push the price envelope toward $70… I know that when I filled up my gas tank last week in S.W. Missouri, the price of gas was very high! I was like, “Man, and I WAS thinking about getting a new gas guzzler just to tick off all the naysayers, but I guess I won’t now!” I’ve driven an SUV of some kind for 20 years, and I don’t think I could or would even think about going to a small car to drive… So, call me names, call me whatever, I love my BIG CAR!
Even the price of Oil got pushed downward overnight, and it lost its $69 handle…
OK… Well the 10-year Treasury’s yield bounced higher after the jobs report on Friday… On Thursday, when I left you, the 10-year’s yield was 1.29%, and last night when I looked at it the yield has risen to 1.34%… And this morning it has risen more to 1.36% I guess the bond boys didn’t like the idea of no tapering that could result from the bad employment reports… So, if the Cartel isn’t going to be buying the bulk of the Treasury auctions, who then will be left to buy them up? And brother do we have some deficit spending coming down the pike that’s going to need to be financed!
You see, the major buyers of Treasuries in the past couple of years, had been the Cartel, China, and Japan… We already know that Russia bowed out of owning any Treasuries, and China and Japan’s appetite for Treasuries has waned… Who will be the next major player to buy up our auctioned Treasuries? I don’t see any country stepping up to the plate to take a swing…
That means the Cartel will have to continue to buy bonds… You know I was reading a bit about the Cartel’s Balance sheet yesterday, and the writer was pointing out that in the Fed’s balance sheet has gone from $800 Billion to $8 Trillion… And the GDP of the nation is not as prosperous as it was 40-50 years ago, when the Cartel wasn’t trying to monopolize the bond market… I wish Cartel Chairman, Jerome Powell, would read articles like this one that I read, and maybe he’d get a different idea in his hard head that he should leave the economy, stock market, and bond market alone to trade on its own merits…
I’m very tired this morning… I haven’t been sleeping well, and my breathing has hit a snag, as it is not getting better… It has improved greatly, don’t get me wrong on that, but it has failed to keep getting better… So, I had better button this up and get it out the door, before I give up the ship and go back to sleep!
The data this week will be difficult to find… The stupid CPI (consumer inflation) will print today, and quite frankly this data has been through the wringer so much that it doesn’t reflect the true inflation that we are experiencing… The Chapwood Index that I showed you all about a year ago, shows that Inflation is really about 13%… Shadowstats.com shows that inflation is really about 13.4%, which means, that our REAL interest rates on a 10-year Treasury are negative 10%!!!!! No wonder no one is lining up to buy our Treasuries!
To recap… The jobs jamboree last Friday was very disappointing to those not realizing that the GDP growth in this country has been fueled by Gov’t Spending, and they were surprised to see the jobs number come in at just 247,000 VS the 720,000 expected… The dollar immediately got sold with the currencies rallying, and Gold rising $18 and Silver rising 78-cents after the data printed on Friday… Yesterday, the markets here were closed, and so the global trading was lacking volume, but the dollar won back some of the lost ground from Friday, for what reason I have no idea… And in the overnight markets the dollar rallied, for some unknown reason…
For What It’s Worth…. I saw this yesterday on Twitter, and went to the source, and found this article on world food prices soaring… So much for the Cartel’s “Transitory” B.S. This article can be found here: World Food Prices Jump In August To Near Decade High | ZeroHedge
Or, here’s your snippet: “Central banks and mainstream media continue to peddle the notion that soaring food inflation is temporary and the average Joe and Jane should not worry about it. But in a new report via the Rome-based Food and Agriculture Organization (FAO), global food prices are on the rise, once again, and back to near-decade highs.
FAO released a statement Thursday that detailed after two consecutive months of declines, world food prices in August jumped due to solid gains in sugar, vegetable oils, and cereals.
FAO’s food price index, which follows international prices of globally traded food commodities, averaged 127.4 points in August, up 3.9 points (3.1%) from July and 31.5 points (32.9%) from the same period last year.
In August, the most significant driver of food prices was FAO Sugar Price Index, which jumped 9.6% from July due to frost damage to crops in Brazil, the world’s largest sugar exporter. Readers may recall in “Frost Bites Brazilian Sugar Crop As Prices Zoom Higher,” we noted multiple weather disasters in Brazil severely damaged the sugar crop.
The second-largest jump in the basket was the FAO Vegetable Oil Price Index, which rose 6.7% last month, as international palm oil prices soared to historic highs because of below-potential production.
The FAO Cereal Price Index increased 3.4% higher in August versus July. The meat index edged up slightly in August, and the dairy index sunk.
A combination of global droughts, volatile weather, labor shortages, and supply chain disruptions persisting from COVID, among others, have contributed to the rapid rise in food prices over the last year.
Heading into fall, soaring food inflation shows no signs of abating and may worsen. This may cause socio-economic turmoil in emerging market economies, mainly because people in those countries allocate more of their daily budgets to food.”
Chuck again… I know a little long in the tooth for the snippet today, but I wanted to make sure you got the message of higher food prices coming to a grocery store near you! Yes, Global food prices are soaring higher and higher, and our Central Bank keeps trying those Jedi Mind Tricks on consumers and the markets… At some time in the future, the Cartel will have to admit they were wrong about inflation, and when they do watch out, because with that mea culpa will most likely bring about an increase in interest rates… And according the Russian Central Bank, that’s when the rubber hits the road…
Market prices 9/7/2021: American Style: A$ .7394, kiwi .7118, C$ .7945, euro 1.1861, sterling 1.3775, Swiss $1.0929, European Style: rand 14.3211, krone 8.6761, SEK 8.5563, forint 293.91, zloty 3.8109, koruna 21.4156, RUB 72.92, yen 110.04, sing 1.3452, HKD 7.7738, INR 73.37, China 6.4535, pesos 19.94, BRL 5.1820, BBDXY 1,143.47, Dollar Index 92.36, Oil $68.53, 10-year 1.36%, Silver $24.37, Platinum $1,014.00, Palladium $2,484.00, Copper $4.20, and Gold… $1,811.50
That’s it for today… Well, with the Cardinals probably missing the playoffs this year (as called by me, there are 26 games left for them to figure it out) at least the Management / Front office can’t say it was a successful season, and maybe they’ll do something in the offseason to improve the team… Right now the only pitcher in the rotation that we can depend on, is 40 years old, and a couple of years ago was ready to retire! So, did you have a nice holiday weekend? I sure hope you did, for it’s the last one of the summer, and we won’t have another 3 day weekend for a while… Can you believe we’re already into the 2nd Week of September? My mom used to say, Time sure flies when you’re having fun… I don’t think the last month has been much fun for me, but… the time sure has flown by! The Gin Blossoms take us to the finish line today with their song: Found Out About You… the Gin Blossoms are one of those 90’s bands that had a great 1st album, and not so great 2nd Album, and then faded away… OK, with that I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!
Chuck Butler