January 26, 2022
* Dollar rallies early, but gets sold at the end of the day
* Can the Fed/ Cabal/ Cartel save their credibility?
Good Day… And a Wonderful Wednesday to you! Today is my youngest sister’s birthday! So Happy Birthday Joanie! I attended her surprise birthday party last month when she was in St. Louis for the holiday. I still can’t believe she turned xx… Where has the time gone? She is 7 years younger than me, but when we were growing up it sure seemed to me more like 10 years! Of the original 7 Butler kids, there are just 4 of us left, and I’ve tested the other side of life a couple of times in the last 15 years! The Outlaws greet me this morning with their song: There Goes Another Love Song…
Well we had a mixed bag of trading yesterday… The dollar started the day very strong, with the BBDXY trading up to 1,178 to start the day… and ended the day still at a gain for the day, but at a much less gain that earlier. The closing figure for the DDBXY yesterday was 1,176.03… Gold and Silver saw some recovery during the day too, with Gold finishing the day up $4.70, and Silver changing that 30-cent loss early in the day to a 19-cent loss to end the day… Gold closed at 1,848.90, yesterday, and Silver closed at $23.90…
The price of Oil also saw a recovery during the day yesterday, and ended the day with an $85 handle, after falling to the $83 handle earlier in the overnight markets. Bonds were stuck in the mud, with no movement whatsoever! Just so you know, which I’m sure most of you already know, because I’ve explained this previously, but when I talk about bonds, I’m specifically talking about the 10-year Treasury, because…. The 10-year is the base for mortgage rates, personal loans, etc.
In the overnight markets last night… there’s been little to no movement in the currencies, although the euro, which had climbed back above the 1.13 handle yesterday, is back below that figure early this morning. The BBDXY which closed the day yesterday at 1,176.03, has risen a smidgen this morning to trade at 1,176.39… Gold is starting the FOMC day down a couple of bucks, and Silver has gained 11-cents to climb back over the $24 handle… Poland hiked rates yesterday to combat their inflation, and there are rumors about that the Bank of Canada is next in line to hike rates, especially after the FOMC hikes…
There are all kinds of articles this morning talking about how Fed/ Cabal/ Cartel Chairman, Jerome Powell, must save his credibility in the next two meetings… I laugh/ chuckle when I see these things because to me, Powell has no credibility now, and I doubt he’s going to save whatever he has left, because that’s the history of the Fed/ Cabal/ Cartel…
Bonds moved little overnight but what movement they had saw a small rise in the 10-year’s yield to 1.79%… Strange for an FOMC Day, to see much movement, if any, in bonds…
I’m sure that the bonds didn’t move yesterday, because of the FOMC meeting today… This is an important FOMC because they will basically tell us in the press conference following the meeting that they are ready to hike rates 6 weeks from now…
Regarding the FOMC meeting today and the press conference that follows the meeting, Dave Rosenberg had this to say to Chairman Powell on Twitter yesterday: “Memo to Powell: say as little as possible tomorrow. Do not commit to anything, including a March rate hike. Keep your options open in this period of intense market volatility and economic uncertainty. You can always revisit your hawkish intentions another time, but not tomorrow.” – David Rosenberg on Twitter
Those are very smart words to say from Mr. Rosenberg… And I’m not being facetious in any way! Powell needs to keep his powder dry for as long as he can to squeeze out as much as he can regarding the help inflation gives to the debt to GDP ratio, that I talked about yesterday…
But with inflation soaring, this is getting to be very serious stuff folks… Remember a few months ago, when famous economists kept telling us that what we were experiencing was not real inflation because the VIX was stagnant and wages weren’t buzzing higher? Well, they all have changed their tunes, and they are longer talking about deflation…
Speaking of inflation, I read yesterday that hog futures had hit a 6 month high, and wheat has soared to a two-month high… And Friday, we’ll get to see the PCE (Personal Consumption Expenditures) that’s not issued by the devious BLS, but instead by the Bureau of Economic Analysis… Now, I’m not saying that the BEA doesn’t have their own set of hedonic adjustments, but at least they have to used different ones than the BLS use, otherwise, why would we need to see two different inflation reports?
In addition to what I just said, I’ll tell you that my friend, Dennis Miller sent me an article yesterday that followed up on that preposterous statement that the POTUS made the day before calling a news reporter, “a stupid son of b…” That really ticked me off to no end, but then when I read this article he sent me it really got my motor revving! Here’s a sample of that stupid stuff that people say…
“In an op-ed for CNN Business last December, Alison Morrow wrote that “inflation can actually be good for everyday Americans and bad for rich people.”:
Inflation can actually be a good thing for many working-class Americans, especially those with fixed-rate debt like a 30-year mortgage. That’s because wages are going up, which not only empowers workers but also gives them more money to pay down debt.”
Yeah, right… and the POTUS should be directing his preposterous statement at YOU, Ms. Morrow! I need you to tell me just how good rising inflation is for working-class Americans, besides this mumble-de-goop about wages rising… Because wages, while they may be rising, aren’t rising with inflation, so it’s still a net loss for us! And then after the Fed/ Cabal/ Cartel attempts to calm inflation, with their rate hikes, and the economy comes crashing down, what will you say then, Ms. Morrow, that the crash is also good for working-class Americans?
Oh, and speaking of rate hikes… Don’t forget that any rate hike the U.S. Fed/ Cabal/ Cartel make will have to be duplicated in any country that pegs their currency to the dollar… Like Hong Kong, who already had the worst performing stock market last year, and has basically shut down their economy because of the OMIGOD variant… They are very far from needing a rate hike, but… They are not our concern here in the country, at least not their economy…
In the U.S. Data Cupboard yesterday, we saw the Case/ Shiller Home Price Index drop from 19 to 18.8, and we saw the stupid Consumer Confidence Index fall from 115, to 113… Still way too confident in the U.S. economy / stocks than I would think people would be… But then most of think that trees grow to the moon…
Today’s Data Cupboard is all about the FOMC meeting that will take place today, and adjorn about 1PM EST, when the chairman steps out of the room to make a press conference and talk about what the FOMC members talked about…
To recap… Well, yesterday morning looked like we needed to take cover for a day or two, as the dollar was swinging a big stick, but that ended sooner than I thought it would, ending yesterday mid morning… Gold reversed it’s early problems and ended up $4.70, and the BBDXY ended up giving back 2 points of its earlier gain… Traders were getting their ducks in a row for the FOMC meeting and press conference today… In the overnight markets…
For What It’s Worth… Ok, another dry day for FWIW articles, shoot Rudy, to prove my point, even Ed Steer had only a few articles this morning! But I found this one that talks about the FOMC rate hike, and how the Fed/ Cabal/ Cartel needs to smooth out the landing for economy… and it can be found here: All eyes on the Fed, but can it ‘soothe’ markets? Here’s what to expect | Kitco News
Or, here’s your snippet: “After a few wild trading days of stocks and crypto selloffs contrasted by solid gold prices, markets have zeroed in on the Federal Reserve meeting this Wednesday. But can the U.S. central bank provide any relief in light of all the hawkish expectations? Analysts weigh in.
It is widely expected that the Fed will keep its monetary policy on hold during the January meeting. But this time around, it is all about what to expect in March.
Many market observers have suggested that the Fed is unlikely to walk back its hawkish promises of wrapping up tapering sooner-than-expected, introducing at least three rate hikes this year, and looking at balance sheet runoff after completing tapering.
“The focus is on this week’s FOMC meeting, with a growing cohort of participants hoping that the Fed will manage to provide a soothing tone for markets. Considering that Chair Powell’s primary goal is to prevent a de-anchoring of inflation expectations, it’s unlikely that the Fed will pivot from their plan to start hiking rates as soon as March, and start quantitative tightening soon after,” said strategists at TD Securities.
The reason for a much more aggressive Federal Reserve in 2022 is the four-decade high inflation numbers and rising wage pressures. And this situation is not about to change, said BBH Global Currency Strategy head Win Thin.
“A hawkish hold is widely expected as the Fed sets the market up for liftoff at the next meeting March 15-16 … A hike then is fully priced in, as are three more hikes in each subsequent quarter this year,” said Thin. “We expect Chair Powell to send a very clear signal. Markets will be keen to see any clues on how soon the Fed will allow balance sheet runoff. We had thought this would be a 2023 story, but given recent official comments and the accelerated timeline, we believe runoff will begin in Q3.”
The Fed’s number one priority remains to get inflation under control as the U.S. economy moves closer and closer to full employment. “The Fed simply cannot target the equity market as well. Yes, financial stability is the Fed’s implicit third target but not every correction or bear market results in financial instability, especially as the U.S. economy is well on its way to recovering from the pandemic,” Thin pointed out.
Markets have been prepared for a March rate hike for a while. But what could catch a lot off guard is a 50-basis-point hike in March and a sooner-than-expected balance sheet runoff.”
Chuck again… Yeah right, a 50 BPS rate hike by the Fed/ Cabal/ Cartel would definitely surprise the markets, and me! For I’m down for 25 BPS hikes this year, and if they make it to the end of year still hiking rates, our Fed Funds rate would be 1.20%, still negative in real returns, and inflation will still be a problem… I hate to be the bearer of bad news here, because, as I’ve stated before, I live here too, and I need dollars for my gas, groceries and giggles…
Market Prices 1/26/2022: American Style: A$ .7170, kiwi .6691, C$ .7959, euro 1.1277, sterling 1.3574, Swiss $1.0869, European Style: rand 15.1389, krone 8.8948, SEK 9.2582, forint 318.59, zloty 4.0625, koruna 21.7682, RUB 79.20, yen 114.18, sing 1.3444, HKD 7.7848, INR 74.83, China 6.3230, peso 20.57, BRL 5.4333, BBDXY 1,176.39, Dollar Index 96.09, Oil $86.21, 10-year 1.79%, Silver $24.01, Platinum $1,056.00, Palladium $2,377.00, Copper $4.50, and Gold… $1,846.70
That’s if for today… All eyes will be on the FOMC announcement today, and then when the announcement doesn’t yield anything the focus will shift to the press conference… It was a nice day here yesterday, but chilly if you weren’t in the sun… I thought all the time I was sitting out in the sun with a cap on that my face was not being hit by the sun… But when I woke up yesterday, and my face is fire red, well… I realized that my baseball cap wasn’t doing my face any good, so yesterday I pulled a BIG Straw hat out of the closet and donned it before going outside… Too late to save me, but in a few days the redness will be gone… I also found out that the cream that the doctor game me for my rosacea is sensitive to the sun… YIKES! I wish that I knew what I know now, when I was younger! – Faces… So… Happy Birthday to my youngest sister, Joanie today… The Amazing Rhythm Aces take us to the finish line today with their song: Third Rate Romance, Low Rate Rendezvous … I hope you have a wonderful Wednesday today, and Please Be Good To Yourself, while Being Positive and testing negative!
Chuck Butler