March 3, 2022
* Currencies rally VS the dollar yesterday
* But Gold gets sold alongside the dollar…
Good Day… And a Tub Thumpin’ Thursday to one and all! Good friends arrived at our door yesterday, for a visit, and spent the day on the balcony, talking, having lunch, etc. Then a dinner out at one of my fave places down here named: Jumby Bay… Yesterday began with the sun shining brightly, and the overnight temps giving way to warmer temps, and then around noon, it all disappeared… And clouds were the call of the day… But the sun will come out tomorrow, bet your bottom dollar that, tomorrow, there’s be sun… (sorry Annie!) Blind Faith greets me this morning with their song, and a song that I can relate to: Can’t Find My Way Home…
When I left you yesterday morning, the dollar was getting bought, and the BBDXY had risen to 1,186.73, but as the day wore on, the dollar saw selling that brought the BBDXY back down to 1,184.80, which was down from the previous day’s close of 1,18592… The euro, however, did not see any benefits of this dollar selling, as I explained the other day, the euro is getting caught in the middle of the Russian / Ukraine conflict. Too close for comfort, I guess… ‘
And Gold, which the previous day gained alongside the dollar gains, lost ground yesterday alongside the dollar’s losses… Gold lost $16.60 on the day to close at $1,929.70, and Silver lost a whopping 3-cents to close at $25.40… The price of Oil added a couple of bucks yesterday, and the commodity index rose to a level not seen since March 2009, Before QE, Before ZIRP, Before counterfeiting, and after the Financial Meltdown… I’m telling you now and maybe you’ll listen to me later that history is playing out before our eyes once again, with commodities rallying to hedge inflation risks…
And the Commodity Currencies are seeing the benefits of having commodities as a major export.. The Aussie dollar (A$), N. Zealand kiwi, Canadian loonies, Norwegian krone, Brazilian real, and others have held their positions during this run for safety of the dollar (how ironic!) and in some cases they have gained VS the dollar. The A$ is one of those gaining VS the dollar, as it has climbed above the 73-cents figure.
Bonds lost some major ground yesterday, and all this Oil up, dollar down, Bonds down, all came after Fed/ Cabal/ Cartel chairman Tempore told an audience that he favored “modest rate hikes”, and that put the fear of allowing inflation to keep running in the markets/ traders, minds… I have an article that talks about Powell, and his message yesterday for you in the FWIW section today… So, you won’t want to miss that!
In the overnight markets last night… Once again, the dollar was bought overseas, and brought the euro below the 1.11 figure. The BBDXY this morning is trading at 1,187.24… That’s up over 2 index figures from yesterday’s close. The price of Oil continues to surge higher, and this morning it trades with a $112 handle, while bonds continued to get sold, on the Powell being modest talk…
Gold is up $6 in the early trading today, and Silver is up a pug nickel! The dollar is up this morning, and so is Gold… Hmmm….
I’m still very concerned for out sake, and our economy’s sake that we decided to cut Russia out of SWIFT… I found this in Dave Gonigam’s 5 Minute Forecast yesterday… “Putin has the means to cut off critical minerals and gasses needed to sustain the West’s supply chain for semiconductor chips,” Evans-Pritchard concurs, “upping the ante in the middle of a worldwide chip crunch.”
Furthermore? “If [Putin] controlled Ukraine, his control over key strategic minerals would be even more dominant,” he says. “Some 90% of the world supply of neon, used as laser gas for chip lithography, comes from Russia and Ukraine.”
Then there’s palladium, “used for [chip] sensors, plating material and computer memory”…
Again, I’m not condoning what Russia did, what I’m concerned about it that Russia goes into a shell, and stops exporting things that people around the world need… or if they do export it the item will have doubled in cost, maybe tripled…
Another thing that has come to thought, and that is Russia’s trade with its buddy in Asia, China… The Chinese renminbi has been quite strong, while the ruble has, as everyone knows, fallen out of bed, and plummeted… This situation will make Chinese exports to Russia very, very expensive, and with all the other sanctions in Russia crimping the ability of the folks there to access money, etc. Chinese trade with Russia could become a real fatality of this war.
Inflation isn’t going anywhere, I don’t believe Jerome Powell, when he says that “inflation will ease as the year goes on”… Well, let’s see I could go through a list of quotes by Fed/ Cabal/ Cartel past Chairman that I’m sure they rued the day that said them, afterward, when they were proven to be wrong, very wrong, oh-so wrong, and just plain wrong! Just for starters all we have to do is go back 6 months, when the Fed Heads kept telling us that the inflation was transitory… Wrong, very wrong, oh-so wrong, and just plain wrong! And when the Fed/ Cabal/ Cartel finally admitted that inflation was a problem, did they apologize for their misleading comments? No… They didn’t, and the sad part is that the markets let them off the hook, and didn’t hold their feet to the fire…
The U.S. Data Cupboard today has Feb. Factory Orders and Capital Goods Orders… I expect these both to have bad numbers… And then later today we get the second part of Jerome Powell’s testimony to congress, where he will attempt to tamp down hiw “modest rate hike” talk from yesterday…
To Recap… Jerome Powell threw a cat among the pigeons yesterday, squashing the hopes of traders and the markets, by saying that he favored “modest rate hikes”, whereas the markets had expected the Chairman Tempore, to come out with both barrels blazing, and aggressively go after rising inflation. Of course, Chuck thinks that if they had only listened to him, they wouldn’t have had to experience these wild swings… The price of Oil is still surging and trades with a $112 handle this morning, while bonds are getting sold once again… with yields rising once again, makes you feel bad for the buyers of the bonds at 1.71%, earlier this week, eh?
For What It’s Worth… Well, Powell threw a cat among the pigeons yesterday, calling for modest rate hikes, which is bang on with what I predicted the FOMC would do… For those of you keeping score at home, I called for 25 BPS rate hikes… So, anyway, here’s the link to the article: Wall Street roars back to rally mode, even as oil rises anew – Breitbart
Or, here’s your snippet:” Wall Street took another sharp swing Wednesday, this time back to rally mode, as stocks and Treasury yields rose even as U.S. crude oil prices climbed to the highest level in more than a decade.
The S&P 500 rose 1.9%, recouping its losses from earlier in the week, after Federal Reserve Chair Jerome Powell said he supports a more modest rise in interest rates this month than some investors had feared. He also said he still expects inflation, which is at its highest level in 40 years, to moderate through the year.
“Although we’ve had some Fed governors lately saying ‘Oh my God, this is such a huge crisis,’ the conventional wisdom is slow and steady wins the race right now,” said J.J. Kinahan, chief strategist with TD Ameritrade.
The comments helped drive the market higher, adding to modest gains from earlier in the morning. Other areas of the market also gained ground a day after worries about Russia’s invasion of Ukraine sent the S&P 500 tumbling 1.5% and prices soaring for all kinds of commodities.
Treasury yields climbed after falling sharply earlier this week as investors clamored for safety. Gold receded, and a measure of nervousness among stock investors on Wall Street eased after swinging sharply in recent days.
“We’ve seen wild swings, but not major changes in the indexes,” said Jeff Kleintop, chief global investment strategist at Charles Schwab. “Geopolitical conflicts can be very unsettling, but you don’t tend to get bear markets from these, just periods of volatility.”
Powell said in testimony to Congress that the Fed is set to raise its key interest rate for the first time since 2018. But he also said the attack on Ukraine may have muddied conditions, with its impact on the U.S. economy “highly uncertain,” adding that “we’re never on autopilot.”
Chuck again… the markets had all thought, and not listened to me, that the FOMC was ready to be aggressive and fight inflation, and they had traded assets accordingly, only to hear Powell throw cold water on their thoughts… Tsk, Tsk, if they had only listened to me!
Market Prices 3/3/2022: American Style: A$ .7305, kiwi .6778, C$ .7916, euro 1.1090, sterling 1.3378, Swiss $1.0870, European Style: rand 15.2604, krone 8.8928, SEK 9.7138, forint 341.45, zloty 4.3134, koruna 22.0984, RUB 108.95, yen 115.73, sing 1.3578, HKD 7.8140, INR 75.98, China 6.3196, peso 20.70, BRL 5.1124, BBDXY 1,187.24, Dollar Index 97.60, Oil $112.69, 10-year 1.85%, Silver $25.45, Platinum $1,098.00, Palladium $2,824.00, Copper $4.69, and Gold… $1,936.30
That’s it for today… After learning the game of backgammon, I ordered my own backgammon set and it arrived yesterday… Now, I just need for Kathy to take an interest to have someone to play! I’m watching the sun rise out of the ocean this morning… I was looking through my library of pictures on my phone, and realized that I had taken many sunrise pictures though the years… The talk at dinner last night centered around DNA testing… Well, as you can imagine, I’m not for it, because I’m afraid that the database that these companies use can either be hacked, or sold to the Gov’t. Not that I’m planning on doing anything illegal, it’s just not where my information needs to be held… Ok… I’m still holding out hope that some spring training games will be played this month… But when the two sides aren’t even talking, that seems to be wasted hope… UGH! Ian Gomm takes us to the finish line with his one hit wonder song: Hold On. I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow! And Please Be Good To Yourself! Be Positive, Test Negative!
Chuck Butler