March 1, 2023
* Currencies & metals rally in the overnight markets!
* No Tik-Tok for you! (soup nazi voice! )
Good day… And a Wonderful Wednesday to you! And Welcome to March! Another Chamber of Commerce Day here yesterday greeted my friends, Duane and Rick to S. Florida! The sun rising out of the ocean this morning is simply beautiful.. It was a bad night for St. Louis sports… The StL University Billikens lost a game on the road, and it was an important game for them… UGH! And our Blues continued to lose games, and have lost every game since they traded their Captain… Hmmm…. I’m thinking that this will be short-n-sweet this morning, as I’ve had little luck finding things to talk about that I haven’t already hammered home multiple times! Thin Lizzy greets me this morning with their song: The Boys Are Back In Town.. (kind of appropriate song title for my buddies)
Well, there were reports yesterday of a huge amount of short positions in Gold & Silver getting closed out for month-end accounting, and the result from that short covering saw Gold gain $9.60 on the day and Silver gain 25-cents.. Gold ended the day at $1,827.80, and Silver at $20.99. There wasn’t much happening in the currencies yesterday, with the BBDXY gaining only 1 index point. I see this lack of follow-up by the dollar, very interesting… Usually, when something like this goes on, it’s time for a big move the other day… Like I’ve explained before, like a star that’s burning out, it shines the brightest right before the burn out…
In The overnight markets last night, we may well have seen the burn out begin… The BBDXY has lost 7 index points overnight, the euro is pushing higher once again, and the buying of kiwi has started up again… The best performing currency so far this year has been… are you ready for this? I bet in a million years you couldn’t guess this one… The Hungarian forint… Go figure! One of the, what I call, The Euro Wannabes, have all gotten a little stronger… What? You don’t recall the euro Wannabes? Ahh grasshopper, the three amigos here are the Hungarian forint, Polish zloty, and the Czech koruna…
Gold is following up yesterday’s gains with another gain in the early markets today, of $9… And Silver has climbed back above the $21 handle this morning with an 8-cent gain in the early trading. The price of Oil is steady with a $76 handle, and Bonds are so-so… stuck in a range, with no major conviction to move one way or the other by the bond boys…
Pam and Russ Martens from www.wallstreetonparade.com sent out a very interesting article yesterday, reporting that… well, let me allow you to listen from them, for they wrote it: “According to Goldman’s annual report, it is being investigated for pretty much everything it does to make money: derivatives, currencies, mortgages, financial advisory, securities lending, dark pools, investment management, commodities, U.S. Treasuries, corporate bonds, credit cards, hiring and compensation practices, research practices, compliance with the Foreign Corrupt Practices Act, transactions involving government-related financings – and on and on.
Things are so bad that it concedes in this annual report that it may have under-reserved for its legal costs by $2.3 billion.”
Chuck again, so… it seems that Lola has gotten a major snag in her stockings! The regulators will not be able to shut down Lola, or even cause her to stumble… They’ll get the memo soon that says, “Leave Lola alone”… I’m just saying…
The Case/ Shiller Home Price Index showed a house price drop in January, which marked 6 straight months of home price drops… And the headline national home price index is at it lowest since March 2022… the home price chart looks like half of a M…. Up and down with the downward slope not looking like it’s going to stop any time soon… I told you all that this would be the result of the Fed Heads’ rate hikes, and now it’s showing up…
In a case of “it’s about time!” The White House is giving government agencies 30 days to remove Chinese-owned TikTok from federal devices over security concerns surrounding the video-sharing app. Congress approved the ban in December.
The news comes amid concerns TikTok could be used by Beijing to collect individual private data… But the real reason that the Gov’t won’t admit to is that they want to remove this app because the employees are using it all day instead of working! I know when I ran a trading desk, there were temptations to peruse the internet all day, but we were too busy to do that! So, keep them busy, keep their noses down and get to work, and quit watching videos on Tik-Tok!
I was doing some reading yesterday, and came across an article that had the writer talking about a Bullish Bank of Japan… (BOJ)… I saw that comment and about fell out of my chair! You’ve got to be kidding me, right? Well, the writer was steadfast in his idea that the BOJ will be entertaining the thoughts of rate hikes soon… That idea made its way to the currency desks, and the yen got bought for the first time in a month of Sundays! Well, I’m from Missouri, the BOJ is going to have to “show me”… until they do, I’ll keep saying that Japan is a basket case, and the yen is not worthy…
I’m sure the brief up-tick of the yen scared some of the Carry Trade participants, but In my opinion, they have nothing to be concerned about.. Carry On, my wayward son! (Kansas!)
The U.S. Data Cupboard today has the Feb reading of the ISM (manufacturing index), which has fallen below the 50 line that marks the difference between contraction and expansion… The last reading in January had the ISM at 47… Now, if things worked out the way they are supposed to, all the regional readings for manufacturing have come in negative, and that should be the harbinger for a weaker ISM national report… Remember something that I taught you all quite a few years ago, and that is if the ISM falls below 45 for two months, the economy is in a deep recession… So, keep that in mind..
We also have 3 Fed Heads out speaking today… Don’t rush out and try to hear what they have to say, for it’s all sex, lies, and inuendo! Just kidding… But sometimes I truly think that to be the case!
For What It’s Worth… I told you last week how so many people were delinquent in their sub prime car loans… Well, this week it came to a head, and the subprime lending company folded tent… That’s what this article is about and it can be found here; Subprime Auto Lender And Used Car Retailer Collapses As Distress Cycle Finally Arrives | ZeroHedge
Or, here’s your snippet: “One month ago, when discussing the “perfect storm” hitting the US auto market, we showed that according to Fitch “More Americans Can’t Afford Their Car Payments Than During The Peak Of Financial Crisis”…
… which was to be expected: after all the latest consumer credit report from the Fed revealed an exponential spike in the amount of new car loans, which increased by more than $2,000 in one quarter, from just over $38,000 (a record), to $40,155 (a new record).
And yet something just didn’t click: if so many subprime Americans were saddled with record amounts of auto loans – on average more than $40K – where were the defaults? After all, the average loan rate for new car loans just hit a 13 year high and will soon rise to the highest level this centiry.
Well, after a lengthy period in which nothing seemed to happen, suddenly the dominoes are starting to fall, and as Bloomberg reports, used car retailer and subprime auto loan lender, American Car Center, told employees the business was closing its doors, just one day after the company had hoped to pull off a funding Hail Mary by selling a $222 million bond (it failed).
According to Bloomberg, the used car retailer, which targets consumers regardless of their credit history (and thus targets almost entirely subprime borrowers who can’t get a loan elsewhere), said in an email to employees on Friday the firm was ceasing all operations, closing its headquarters in Memphis, Tennessee, and that all employees would be terminated by the end of the business day, the people said. It employed about 288 people at its headquarters.
The closure email came a day after the company sent another message to staff saying management and advisors had been working with lenders to improve liquidity and continue operations. American Car Center, which has more than 40 dealerships across 10 states, is owned by York Capital’s private equity group.
The long overdue collapse – the first of many – comes as more Americans are starting to fall behind on their car payments, and the distress cycle is rapidly accelerating.
Think of it as the infamous New Century domino that signaled the collapse of subprime housing… only for cars.”
Chuck again… ok cars don’t have the size loans of houses (in most cases that is) so this won’t be as big of a catastrophe as the housing bubble pop in 2007… But… it’s still a major part of the economy… I’m just saying…
Market Prices 3/1/2023: American Style: A$ .6767, kiwi .6263, C$ .7350, euro 1.0675, sterling 1.2036, Swiss $1.0675, European Style: rand 18.1379, krone 10.3411, SEK 10.3993, forint 351.60, zloty 4.4017, koruna 21.9574, RUB 75.31, yen 135.40, sing 1.3406, HKD 7.8499, INR 82.50, China 6.8700, peso 18.27, BRL 5.2364, BBDXY 1,247.67, Dollar Index 104.31, Oil $76.26, 10-year 3.91%, Silver $21.07, Platinum $961.00, Palladium $1,433.00, Copper $4.04, and Gold… $1,836.90
That’s it for today…See? Short-n-sweet like I promised! Well, maybe not as short, as I thought it would be, but it certainly is SWEET! Sort of like how I used to tell people when I would meet them, I say I was number 10 on the roster, but number 1 in the hearts of the fans! HA! No game for my beloved Cardinals at Roger Dean today, so what will we do today? Probably just loll around, listen to the game on the radio, and before we know it, it will be dinner time! We could go to Blowing Rocks, or someplace else, but I doubt we will… Ok… keeping this short is getting difficult… so… Alvin Lee and 10 Years After, take us to the finish line today with their song: I’d Love To Change The World… Alvin Lee was a guitar god, and we lost him way to early… I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!
Chuck Butler