Rocktober 7, 2021
* The dollar is a bit stronger this morning…
* Gold & Silver stage another total reversal yesterday!
Good day… and a Tub Thumpin’ Thursday to you! Well, my beloved Cardinals couldn’t find a way to drive a run home last night and their season ended… UGH! And ugly way to lose a game for the Cardinals, and a great way to win a game for the Dodgers…. The Sunrise this morning is blocked by a marine layer of clouds, but I can see the light behind the clouds, and it looks pretty neat… Credence Clearwater Revival greets me this morning with their song: I Put A Spell On You…
OK, to start the day today, we have this from Bloomberg. com: “There’s plenty of relief evident in markets this morning as Senators seem to have all-but agreed a deal on a short-term increase in the debt ceiling. Senate Majority Leader Chuck Schumer suggested an agreement would be in place by this morning. While the deal is surely good news for markets worried about an imminent default, it only moves the problem out to December when the drama and brinksmanship may run again.”
So, like I told you previously… The debt ceiling will be raised, the $3.5 Trillion spendalooza will get passed, and our debt situation will just continue to get worse, as we kick the can down the road… Tsk, Tsk…
Well, how about that! The Reserve Bank of New Zealand (RBNZ) sent me an email on Tuesday night telling me that they had hiked their OCR (official cash rate) by 50 Basis Points (1/2%), and that more could be on the way, as they attempt to fight back inflation… Good for them! Rates are still very low in New Zealand, but at least they’re off of 0%, and could be heading higher! The N.Z. dollar/ kiwi rallied on the news, as it should have, and I’m looking forward to more rate hikes from the RBNZ!
I said when the Norges Bank hiked rates a couple of weeks ago, that I didn’t think Central Banks around the world would follow, and while none had until yesterday, the RBNZ is the only one to step forward and say, “no mas” on inflation! And kiwi has responded accordingly… (rallied!) And the Aussie dollar (A$), kiwi’s kissin’ cousin across the Tasman, was pushed higher too…
That news deserved top billing because… I should have told you that yesterday, but I forgot that the email was in my email box, and the sun was in my eye, and the clump of grass made me miss the ball!
So… The currencies yesterday, staged a comeback of sorts, with the BBDXY moving downward from 1,167.63 in the morning to 1,161.63 at the end of the day… But the BIG reversal was in Gold & Silver… You may recall me telling you yesterday that Gold was down $11.70 and Silver was down 39-cents in the early trading… Well, Gold ended the day up $2.90 and Silver ended the day flat as a pancake (Head East)…
The data yesterday showed the ADP Employment Report to have added a whopping 568,000 jobs in September… And that got traders thinking that with that kind of growth, inflation is not only here but will get worse going forward, and they sold the dollar… Stranger than fiction, but true…
In the overnight markets last night… The dollar is staging a bit of a rally, but not much movement at all in the currencies overnight. Gold is up $1.10 this morning, and Silver is up 15-cents… I wonder what kind of relief the Senate announcement will bring to the currencies and metals this morning… I would have to think that while stocks may recover, bonds would get sold, along with the dollar….
The price of Oil slipped by over $1 in the past 24 hours… But the thing to think about here is that while the price of Oil keeps bouncing back and forth, it’s still leaps and bounds ahead of where it was a year ago…
OK, was I ever surprised and happy at the same time, on Tuesday, when I opened my copy of the 5 Minute Forecast, for my friend, Dave Gonigam, quoted me from the Pfennig! It don’t get quoted, from the news outlets as much as I used to, but… It still makes my day! Thanks Dave!
Speaking of the 5 Minute Forecast, Tuesday, Dave was reminded that about 10 years ago, he was of the thought, and I was too, that individual IRA’s would be required to buy Treasuries… And here’s his response from yesterday’s 5 Minute Forecast…
“Quantitative easing seemed to alleviate the need for that coercive allocation.
“Then negative interest rates in Europe and Japan helped to generate demand for U.S. Treasuries.
Japan has a staggering level of government debt relative to its economic output — a debt-to-GDP ratio of about 266%, or double that of the United States.
Roughly a decade ago, when the level was a slightly less lofty 229%, the Bank of Japan faced a crossroads moment — let interest rates rise and tank the economy or suppress interest rates and tank the yen. The BoJ chose the latter.
Is there any doubt that under similar circumstances, the Fed would make a similar choice — keep a lid on rates and tank the dollar?
With a lid on rates, Uncle Sam’s interest expense stays fairly manageable even with an absolute level of debt that’s sky-high. And if Uncle Sam’s interest expense isn’t spiraling out of control, there’s no need to force-march people into Treasuries in their retirement accounts.”
Chuck again… Yes, Dave explained it well… Quatitative Easing, and ZIRP has done the trick to alleviate the need to require IRA’s from having to buy Treasuries… So, we escaped one bullet… And… once again I’ll remind you that we’re turning Japanese, yes, I really think so!
Yesterday, Bill Bonner, was talking about how all the currency the Fed/ Cabal/ Cartel has printed and thrown at Wall Street in his daily diary, that can be found here: www.rogueeconmics.com … Let’s listen in on one of his thoughts: “Today, we are looking more deeply at how the Federal Reserve’s fake money – approximately $8 trillion of it since 1999 – has fouled the economy and corrupted its major industries.
And none has been more corrupted than the one that got most of the money – Wall Street.
We are in a privileged position. In our own business, we see financial excesses backing up like a clogged toilet.
We see the rush of enthusiasm… the gush of new money… and the market flush with optimism, fantasy, and fraud.
And, if we pay attention, we may know when to expect it all to go down the drain.”
Chuck again, I always love reading what Bill Bonner has to say about things, because he has “this way” about explaining things that makes me want to keep reading, and reading…
And for all of you Mogambo Guru fans out there… The Great Mogambo sent me a note last week, and said that he’s doing better these days, and that he’s trying to write again… And since he sent the note to me, I assume that he will send his notes to me! JMR Chuck!
OK… The U.S. Data Cupboard today has the Weekly Initial Jobless Claims, which have increased each of the previous 3 weeks… I would think it would continue to show increases… The aforementioned ADP Employment Report was a real shocker to me, but it still doesn’t mean the BLS will copy the ADP tomorrow, for they have all kinds of tricks up their sleeves, ala Bullwinkle… But it is what it is, and since no one double checks or verifies numbers any longer, we have to accept it for what it says…
To recap… The RBNZ surprised the world by announcing they had hiked rates 50 Basis Points… Kiwi responded accordingly… The currencies lost ground, but not as much as they had lost earlier in the day, and Gold & Silver staged another reversal of their early morning losses and Gold turned the early morning loss into a gain, while Silver fought back to flat as a pancake (Head East)… In the overnight markets, the dollar is being bought, but not by large margins… So, it could easily be reversed… Chuck gets quoted from the Pfennig in the 5 Minute Forecast, and makes his day!
For What It’s Worth… Well, the 2nd QTR GDP is in the books, and like I’ve explained previously, if it wasn’t for the Gov’t spending, the 6.2% GDP would have been much less… So, the first projections on 3rd QTR GDP are starting to show up, and that’s what this FWIW article is about today, from Pam and Russ Martens, and it can be found here: Closely Watched Atlanta Fed’s GDP Forecast for Third Quarter Cut by 63 Percent Since August (wallstreetonparade.com)
Or, here’s your snippet: “The closely watched Atlanta Fed’s GDPNow forecast for real GDP growth for the third quarter has been slashed by 63 percent since August 2 when the forecast was for 6.3 percent growth. The forecast now stands at a dismal 2.3 percent growth rate as of 7:30 a.m. (EDT) this morning. The Atlanta Fed’s GDPNow forecast could be revised further today after the 10:00 a.m. release of the International Trade and ISM Non-manufacturing Index. (The GDPNow update typically occurs within a few hours of a new data release.)
The Atlanta Fed’s GDPNow model is the seasonally adjusted annual rate. It comes with the following caveat:
“GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter…”
The U.S. is a consumer-based economy with consumer spending representing approximately two-thirds of GDP growth. Taking the pulse of the consumer is thus an important gauge of what might be ahead for the U.S. economy.
Weighing on a less than rosy consumer outlook is the growing awareness that COVID-19 is not going to “magically disappear” anytime soon; that wearing masks and social distancing are now a part of everyday life in America; that supply chain bottlenecks and rising commodity prices are pushing up inflation and raising prices to consumers; and that political gridlock in Washington is making all of the country’s problems worse.
The mood of the consumer is darkening. The Conference Board’s Consumer Confidence Index fell further in September, after declines in both July and August. The Index now stands at 109.3 from a reading of 128.9 in June – a 15 percent drop. The latest report was released on September 28 and noted the following:”
Chuck again… back to the 2% GDPs… here we go… back to muddle through… back to blah… Ooooh, I can hardly stand to wait for all that fund and games! (NOT) And once again my daily check on what Pam & Russ Martens are writing about at Wallstreetonparade.com, paid off with a great article for you dear reader!
Market Prices 10/7/2021: American Style: A$ .7302, kiwi .6935, C$ .7952, euro 1.1568, sterling 1.3616, Swiss $1.0804, European Style: rand 14.8590, krone 8.5834, SEK 8.7720, forint 309.43, zloty 3.9289, koruna 21.9622, RUB 72.43, yen 111.34, sing 1.3571, HKD 7.7847, INR 74.66, China 6.4500, peso 20.50, BRL 5.4867, BBDXY 1,162.08, Dollar Index 94.14, Oil $76.34, 10-year 1.52%, Silver $22.88, Platinum $993.00, Palladium $2,000.00, Copper $4.14, and Gold… $1,765.50
That’s it for today… Well, I tried to stay up for the game last night, but with the Cardinals reverting to their hitless ways, the game was 1-1 when I went to bed… Ok… yesterday was the 31st year since the referees stole a victory from my beloved Missouri Tigers, when they gave Colorado a 5th down on the goal line… The Missouri players still believe that the Colorado player still didn’t get into the end zone, but… Colorado went on to be the National Champions that year… But if not for the referee, they wouldn’t have been in the National Championship game! I attended that game, with good friends, Dean S. and Steve O., and we couldn’t believe the Missouri head coach wasn’t running onto the field to stop the 5th down from happening. There was lots of talk about protesting, but… it was over, and done with… UGH! And that’s where the phrase came from that the team got “Missouried”… So, my beloved Cardinals were a one and done this year for the playoffs… UGH! Now it’s time to start thinking about Spring Training! Hey! in about 4 months, pitchers and catchers report! HA! Billy Paul takes us to the finish line today with his song: Me & Mrs Jones…. I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!
Chuck Butler