February 14, 2022
* Currencies and metals rally on Friday…
* Will We Continue To Turn Japanese?
Good Day… And a Marvelous Monday to you! Well… Kathy came back to S. Florida on Saturday, and immediately lit candles in the condo… I guess the smell was too much bachelor smell? HA! Well, the Super Bowl was last night…The Rams won, but I can’t get myself to say congrats… I liked most of the commercials, except the one for Coinbase… Didn’t get it, period! It was nice to see the Clydesdales back in an ad at the Super Bowl… Well, the weather here has been warmer, but, we get one day of beautiful sunshine, and one day of rain… This pattern will end this week… good riddance! Crosby, Stills & Nash greet me this morning with their song: Suite: Judy Blue Eyes… This song was a love song to Stephen Stills’ girlfriend at the time, Judy Collins… And their appearance at Woodstock, signing this song, led to their stardom as a group…
After suffering through Thursday’s selling… Gold rallied $32 on Friday, as the stock market dropped 503 points, and investors rushed to the safety of Gold in times like this… Notice they rushed to Gold and not Bitcoin… I’m just saying… So… the dollar didn’t really go down on Friday, it slipped a little, but nothing like you would think it would have fallen, given Gold’s $32 gain on the day.
The damage that dollar buyers did to the currencies and Gold on Thursday, was enough to make you find a barf bag… I know, I know, the talk around town was that with inflation rising so quickly, it will take an aggressive Fed to squelch it… But C’Mon, just because The Fed/ Cabal/ Cartel needs to be aggressive, doesn’t mean they will! I’m betting a shiny quarter that they won’t!
The dollar rallied big time on Thursday moving the BBDXY from 1,173 on Thursday morning to close that day at 1,178… Friday the dollar gave back some of that gain, and closed the week at 1,177.62… The euro fell back below 1.14, which it had held for 2 days last week, and the rest of the currencies followed the euro downward on Thursday… And then the euro was there to lead them on their mini-recovery on Friday.
In the overnight markets last night, the dollar was back on the rally tracks, and getting bought hand over fist… The BBDXY, which closed at 1,177.62 on Friday is up to 1,179.95 as we start our day… Gold is down $3 in the early trading, while Silver is up 13-cents, so as we begin this week, Gold is looking perky, along with Silver, and inflation is soaring… But the dollar is getting bought, because traders truly believe the Fed/ Cabal/ Cartel will be aggressive in fighting inflation…
The price of Oil jumped by quite a bit to end the week last week… This morning, the price of Oil is trading with a $93 handle… The saber rattling going on in Europe is also rattling the Oil markets… And Bonds.. well, once again defying gravity, the 10-year’s yield has dropped to 1.91% this morning… Who’s buying this bond? Wouldn’t it be great if you could look at a web site and see who bought the 10-year or any other bond? Then we could blow raspberries at them and say, neener, neener, neener!
Well… By now I’m sure you all have heard that the Gov’t’s report on consumer inflation hit a 40 year high in January, as it rose to 7.5%… This news brought out the Big Guns of the Fed/ Cabal/ Cartel… St. Louis Fed President, James Bullard, he who is known as a dove, started shouting from the rooftops that he backs a 50 BPS rate hike, and an aggressive Fed… So, I have to ask this question of Mr. Bullard… “How does a 50 BPS rate hike and an aggressive Fed, play in the same sandbox, as your chairman Powell’s promise that he’ll deliver a “soft landing” for the economy?”
Of course there were no Bonafide, economics major, journalists in the room with Bullard, so there were no questions like that presented to him… C’Mon James, inquiring minds want to know how that works…. Because if you’ve got an answer, we want to hear it… Or, were you just spouting off to sound like a hawk, that you’re not, so people will gain some solace in your hawkish words? Because if that’s it, then you can forgetaboutit… Because Mom and Pop America, doesn’t pay attention to you guys… Heck, even the media probably wouldn’t pay attention to you if they didn’t have to!
So, maybe I’m all wet here, with my call that the Fed would do 25 BPS rate hikes one after another until somebody, namely the stock jockeys, cried uncle… I guess we have a month to see what gives, and there will be plenty of talk about what the Fed / Cabal/ Cartel will do or won’t do at the FOMC Meeting in March…
Getting back to the inflation print… One would have thought that a 40-year high in even the Gov’t’s watered down inflation report would get Gold firmly on the rally tracks, but nooooooooo! That didn’t happen at all on Thursday, instead, we saw Gold lose $6… Friday made up for Thursday downward move, for sure, but… it would have much more sense it Gold had booked two consecutive up days to end the week.
Last week I proposed that Congress reinvent the Fed/ Cabal/ Cartel… I said that they needed to change their direction, and provide a stable currency (no inflation), quit buying bonds, now and in the future, stop currency printing, and stop worrying about the employment situation, or the stock market, and be the lender of last resort, but only with Congressional approval…
Well, perusing Twitter this past weekend netted this from Sven Heinrich : “The entire Fed board should resign. Not only were they completely wrong, they kept misleading the public with their transitory narrative and persisted on it when the data was already showing they were wrong.And still they keep injecting liquidity. Reckless.” -Sven Heinrich on Twitter
I agree 100%! This group of Fed/ Cabal/ Cartel decision makers have missed the boat, and now they are attempting to swim out to sea without life jackets to catch up with the boat that left them on the shoreline…
So… did you hear the news about what China and Russia agreed to last week? Here’s the skinny: China and Russia agreed to a 30-year deal in which Russia will supply gas to China via a new pipeline, with both sides of the energy transfers managed by state-owned companies And this is the part that should really rattle the chains of the U.S. Gov’t… These two countries decided to settle the trades in euros, not dollars! What a slap in the face of the dollar hegemony, eh?
I’m telling you this now, so that maybe you’ll hear me later, and that is that, this dedollarization that Russia and China have embarked on, is going to gain traction around the world, folks… I’m telling you this so that you can plan accordingly… The dollar, in 10 years from now, and probably sooner will NOT be the reserve currency of the world any longer… There aren’t any challengers to speak of to the throne right now, but… One will be named by default because the dollar doesn’t have the werewithall to compete any longer… That’s my story, and I’m sticking to it!
OK, longtime readers will recall me always talking about how we were Turning Japanese, yes, I really think so… We’ve followed the Japanese in just about every monetary policy they’ve tried, and none of them have worked for Japan, just like well, I’m not here to debate whether bond buying was good for our economy, let’s just say, in my opinion, it widened the gap between those that have, and those that don’t have, and it blew air into the stock market bubble… of which most ordinary people don’t participate in…
Is this what the future for the U.S. looks like? It does appear that we are heading in that direction, with one exception… The U.S., now that the Fed/ Cabal/ Cartel are out of the bond markets (supposedly), depends on other countries to buy a bulk of their Treasuries… While Japan’s bond issuance is usually taken up by the Japanese people… Self-financed, if you will…
Well, The Japanese announced late last week that they were going to continue buy bonds… Japan needs some inflation folks, any inflation would help them get off the schnide, with regards to economic growth… So, as the rest of the world is moving away from easy money, the Japanese are continuing to feed the inflation kraken, in hopes they can awaken him! On second thought, maybe I should have used Godzilla, instead of Kraken…
I’m thinking that the Fed/ Cabal/ Cartel are walking around humming the melody and maybe even some are singing the words to: Torn Between Two Lovers… Feeling like a fool… Torn between two lovers felling like they’re breaking all the rules… Oh, I guess I should have said that the Fed/ caba/ Cartel are torn between fueling the asset bubble, and fighting inflation…
The U.S. Data Cupboard today has nothing, nada, zilch, nil, a big fat goose egg, for data… But on Friday, the U of Michigan printed their Consumer Confidence report for this month, and it fell out of bed! Here’s the skinny : The University of Michigan’s measure of consumer sentiment crashed to an initial February reading of 61.7, from January’s level of 67.2, the lowest reading since October of 2011. That’s a HUGE downward move, eh? I don’t think the people they surveyed are liking what’s being called Bidenflation…
That’s unfair to him I think, because it should be Powellflation… He’s the one that was in charge for most of the currency printing that has fueled this run of inflation… You know the Fed heads, kept interest rates ultra-low for so long, and bought bonds for so long, while printing currency to buy the bonds, that they were under the impression that none of that would fuel inflation… That’s why in the beginning of this inflation run, they kept denying it existed… They like many of the traders that exist these days, either hadn’t ever seen real inflation, or they had forgotten what it looked like… They are getting a cram course on it now, however…
To recap… Thursday’s inflation report was awful, as it hit a 40 year high for consumer inflation, and the dollar rallied strongly on Thursday… Dollar traders were thinking that this higher inflation number would bring about an aggressive Fed… But Chuck points out that an aggressive Fed doesn’t play in the same sandbox as Powell’s promise for a soft landing… You may recall that when Paul Volcker fought runaway inflation in the late 70’s, he was very aggressive, and it threw the economy into a recession… not, a soft landing! Gold got sold on Thursday, but rallied by $32 on Friday, and the dollar got sold a little bit…
For What It’s Worth… This article came to me from the good folks at GATA, and it’s about the difference between GDP and progress… And it can be found here: Difference between growth and progress (goldmoney.com)
Or, here’s your snippet: “The stated objective of nearly all economists, policy planners, and politicians is to achieve economic growth, which they measure by gross domestic product. Attempts to quantify an economy initially focused on gross national product, which differs from GDP by including net flows to and from abroad. GNP was devised by Simon Kuznets, an American Nobel Prize winner and economist, in the early 1930s and GDP followed as the common measure of economic conditions much later.
The federal government had been collecting business and economic data from 1865, but because the dollar was fixed on a gold standard of $20.67 to the ounce in Kuznets’ time and had been since the Gold Standard Act of 1900, the price data was broadly comparable over the previous three decades, permitting reverse engineering of GNP statistics. But Kuznets focused his first report on GNP estimates over the period of the Wall Street bear market, 1929-1932. At that time, the US government was gathering evidence with the objective of ensuring a stock market and banking crisis leading to a depression would be prevented by government action in the future.
GDP replaced GNP in US statistical usage in November 1991, though in many other national accounts the switch had already been made some time before. GDP has since become central to a statistical approach to economic and monetary policies. Coupled with Keynesian theories, economic statistics have superseded the classical economics of the past as the mainstream’s economic analysis.
The human factor which underlies all economic activity has become ignored. A new form of economics was born — macroeconomics. It removes the human factor, and state management of economic outcomes became perceived as a viable policy, along with socialist welfare redistribution of economic resources as the principal feature of modern economies, replacing free markets.
With its math-based approach, fundamental questions over macroeconomics’ appropriateness and of its statistical relevance have been papered over. The government’s statistics are assumed to be as accurate as they can possibly be, and so they go unquestioned. They are accepted as a true representation of the economic condition and increases in GDP are associated with national wealth and improvements in living standards. But besides the rejection of human factors, the underlying questions remain.”
Chuck again… An interesting article, and I just barely touched on it here, so, as the great Paul Harvey used to say, “for the rest of the story”, you ‘ll need to click on the link above…
Market Prices 2/14/2022: American Style: A$ .7096, kiwi .6603, C$ .7828, euro 1.1310, sterling 1.3516, Swiss $1.0819, European Style: rand 15.2527, krone 8.9212, SEK 9.4180, forint 315.36, zloty 4.0382, koruna 21.6751, RUB 77.17, yen 115.11, sing 1.3479, HKD 7.8021, INR 75.49, China 6.3596, peso 20.53, BRL 5.2451, BBDXY 1,179.95, Dollar Index 96.41, Oil $93.22, 10-year 1.91%, Silver $23.89, Platinum $1,031.00, Palladium $2,389.00, Copper $4.48, and Gold… $1,856.80
That’s it for today… Yesterday was my very good friend Duane’s Birthday… I hope you day was grand Dewey! And today is Valentine’s Day… I trust you have done what you needed to do to keep the house quiet tonight, with no arguing! So have you been watching the Olympics? I try, but they just can’t seem to hold my attention… I do like to watch the final round of the Phoenix Open each year, with those crazy crowds! Yesterday, would have been my oldest sister’s birthday, we lost her too soon, she was only 38 when ovarian cancer took her life… Each year on her birthday, I think of how she taught me to slow dance with a girl… she taught me to tie my shoes, she took me to kindergarten the first day… I miss you Brenda… My darling granddaughter, Delaney Grace, sent me a text last night, during halftime and asked me if I was enjoying the halftime show… (she was kidding, she knew I would not like it)… OK… The great Leon Russell takes us to the finish line again today, this time singing his song: This Masquerade… I hope you have a Marvelous Monday, and Please Be Good To Yourself! Be Positive, test Negative!
Chuck Butler