May 25, 2023
* currencies & metals get sold on Wednesday
* FOMC minutes tell us…. NOTHING!
Good day… And a Tub Thumpin’ Thursday to one and all… My good friend, Rick said it best last night… “Just when we thought the Cardinals had turned the page, along comes Matz” Yes, proving once again that Stephen Matz, was a horrible free agent signing last year, he went out and laid another egg last night, leading to a loss by my beloved Cardinals to the Reds… UGH! Good friend, and former colleague, Suzanne, sent me a text last night, to remind me that she’s a Reds fan… What a rain filled day here yesterday… Some sun, so they can count it as a day with sun, but most of the day was rain filled… RIP Tina Turner… We lost Tina Turner yesterday, she was 83, and still dancing… The Hooters greet me this morning with their 80’s song: All You Zombies…
The FOMC Meeting Minutes, were controversial yesterday, in that on one hand, several regions talked about how they weren’t sure interest rates needed to go higher, while on the other hand, there was no, none, nil, nada mention any rate cuts this year… The markets have come full circle with their forecasts for rate hikes/ cuts… In the futures trading, 43% chance of another 25-bps rate hike by July, while just last week rate cuts were expected to begin in July…
The dollar bugs decided that all this confusion was good for the dollar, and the dollar got bought hand over fist yet again yesterday… The BBDXY gained 3 index points on the day, ending the day at 1,244… The currencies didn’t move much in response, to all the dollar strength, though, another strange day in the currencies… The price manipulators saw the FOMC Minutes, and decided that it was a good day to short Gold & Silver, and short them they did… Gold lost $18.20 to end the day at $1,958.50, and Silver lost 39-cents to end the day at $23.13… Apparently, last Friday’s gains in Gold & Silver were a false dawn… I’m at a loss for words to describe how fed up I am with the short paper traders…
The price of Oil briefly dipped below $74 yesterday, but then rallied back over the $74 figure to end the day. And you think everyone is confused with the FOMC Minutes? well, everyone but the bond boys… The 10-year’s yield rose to 3.76% yesterday…
In the overnight markets last night…. The dollar got bought some more… This is really getting out of hand, folks… Overbought, and overbought some more… The BBDXY gained 2 more index points overnight, and the euro is taking the brunt of the dollar strength. Gold is up $4 to start the day today… But Silver has slipped below $23 in the early trading. Poor Silver, it just can’t find a bid these days… The price of Oil slipped by $2 in the past 24 hours, and the 10-year is at 3.68% to start the day today…
The Reserve Bank of New Zealand (RBNZ), hiked their Official Cash Rate 25 Basis Points to 5.50% on Tuesday this week… I forgot to mention it yesterday… This from the RBNZ: “The Committee agreed the level of interest rates are constraining spending and inflation pressure. The OCR will need to remain at a restrictive level for the foreseeable future, to ensure that consumer price inflation returns to the 1-3% annual target range, while supporting maximum sustainable employment.”
And now having the highest interest rate of the industrialized nations, one would think that kiwi would be on the rally tracks… But, that would have been a blast from the past, the way fundamentals ruled, and interest rate differentials were HUGE in fundamentals! Those were the days my friend, we thought they’d never end, we’d sing and dance, forever and a day… (Mary Hopkins)
The RBNZ has told the Fed/ Cabal/ Cartel, I’ll see your 25 Basis Points, and raise you 25 Basis Points… And have moved to the front of the class, in regards to interest rate differentials… I guess when the Fed Heads meet again on June 14, we’ll find out what they have up their sleeve, and if they have something up their collective sleeves, ala Bullwinkle, then it will be nothing! I’ve come to his point in time, where I do believe that whatever the Fed Heads do or don’t do, it’ll be the wrong thing to do…
The debt escalator talks continue… So, I had this thought the other day… And no it’s not political, although it does involve the POTUS… It is my opinion, that the Elites through the POTUS, wants to bring the U.S. economy to its knees, so that he can introduce digital currencies, and collectivism finances… So, what if the POTUS isn’t really trying to negotiate an agreement, because a default would play into the elites plans… This is just how I see things… I guess that it’s times like this that I’m glad the Pfennig Replies doesn’t work! For I know that you can only please 1/2 the people 1/2 the time, and the other 1/2 are going to hate you! So, please don’t hate me, just because I have an opinion that opposes your opinion… Disagreements are good for conversations as long as they remain civil…
OK, moving on… I guess 1 month out on the Treasury yield curve is the place to be… A 1 month T-Bill is yielding 5.83% this morning… The 10-year Treasury Bond yields 3.68%… Talk about an inverted yield curve! The problem with a 1 month T-Bill, is that it matures in 30 days, and then you have to put your money someplace else. Sure, you could roll it into another 1 month T-Bill, but who knows what the yield will be 30 days from now? It could be greatly reduced from buying after the debt escalator talks come to an agreement, or… it could be 10% ( I exaggerate!) from all the selling after the debt escalator talks fail to reach an agreement… But for now, you can’t beat 5.83% in a 1 month T Bill! Sign me up for a tuck load of those please! Shoot Rudy, 30 days from now I may not even still be around, for no one knows! So, live it up while you can! Yes, may I have another 5.83% yield for 30 days?
And the one currency with a gain in the past 24 hours is the Russian ruble… I know, I know, the Russians are the dark side, but the currency is an investment… And you must keep the two things separate… I’m just saying…
And we’ve got to keep our eye on the Singapore dollar… After 5 consecutive tightenings by the Monetary Authority of Singapore (MAS) the Sing dollar is perking up, and recently reached an all-time high VS the Indonesian ringgit… I know that’s not VS the U.S. dollar, but, when you have these regional currencies, they have to be dominant in their region before they can move VS the dollar…
And the British pound sterling has lost its luster (remember I told you it would) as inflation in the U.K. is becoming embedded… Headline CPI printed 8.7% in April, higher than any of the 36 estimates from economists or the 8.4% reading forecast by the central bank. Core prices excluding food, energy and tobacco accelerated to 6.8% last month from 6.2% in March. And this is really weighing on poun sterling…
The U.S. Data Cupboard yesterday had the aforementioned FOMC Meeting Minutes, and a couple of Fed Head speakers out on the road… One Fed Head said that he wasn’t comfortable pausing rate hikes as long as inflation isn’t under control… So, we have that going for us, that is, as long as the Fed Head is a voting member! HA!
Today’s Cupboard has the Weekly Initial Jobless Claims for last week, and that’s about it for today, but like I said yesterday, tomorrow is a datapalooza… So, you won’t want to have missed that! HA!
To recap… The RBNZ hiked rates to the highest level among industrialized nations this week, and kiwi can’t find a bid… go figure! The dollar continues to get bought, and this is really becoming an overbought situation…
For What It’s Worth…. Well, this article come to me from MarketWatch, and while I had it all cued up to be the FWIW article today, Ed Steer then highlighted it in his daily letter this morning, and that solidfied my thought that this is FWIW worthy! It’s about how investors should switch to Gold from stocks, and it can be found here: Investors should put more money in gold and cash as rally in stocks won’t last, top JPMorgan analyst says – MarketWatch
Or, here’s your snippet: “A top JPMorgan Chase & Co. analyst who has been warning clients to stay away from stocks all year is doubling down and advising them to increase their allocations to cash and gold.
JPMorgan Chief Global Markets Strategist Marko Kolanovic advised clients to modestly reduce their exposure to U.S. stocks and corporate debt and up their holdings of cash and short-dated Treasury bills that carry yields north of 5%.
“Even aside from the debt ceiling issue, we maintain that the risk-reward for equities is poor given elevated risk of recession, stretched valuations, high rates and tightening liquidity, and we favor cash over equities at the former’s ~5% yields,” a team led by Kolanovic said in a note shared with MarketWatch.
Kolanovic and his team also recommended traders shift exposure away from crude oil, which has sunk this year on recession fears, and buy more gold, which has rallied since late last year, although it has reversed some of its year-to-date gains over the past few weeks.
Within commodities, we rotate from energy (given recession risks and a potentially fading China growth impulse), to gold following its recent selloff (on its safe-haven demand and as a debt ceiling hedge),” the analysts said.”
Chuck again… While I agree with him on the Gold, but not the Oil position he’s taken… I still believe in Oil, and will continue to do so…
Market Prices 5/25/2003: American Style: A$ .6521, kiwi .6070, C$ .7349, euro 1.0725, sterling 1.2362, Swiss $1.1038, European Style: rand 19.3383, krone 10.9873, SEK 10.7844, forint 347.38, zloty 4.2037, koruna 22.0293, RUB 79.98, yen 137.60, sing 1.3532, HKD 7.8322, INR 82.74, China 7.0694, peso 17.78, BRL 4.9588, BBDXY 1,246.10, Dollar Index 104.09, OIl $72.84, 10-year 3.68%, Silver $22.97, Platinum $1,026.00, Palladium $1,403.00, Copper $3.59, and Gold… $1,962.42
That’s it for today, and this week of course! The sun is out, and it’s going to be a beautiful day today, I can feel it in my bones! Our STL City SC team will be back on the pitch Saturday night… Hopefully they can follow up last week’s 4-0 win with another strong game. Sleeping at night is becoming an ordeal for me, and then with the lack of sleep at night, I get tired and have to take a nap during the day… It’s a pattern that I’d like to stop soon! Jethro Tull takes us to the finish line today with their song: Locomotive Breath… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and please, oh please with sugar on top, Be Good To Yourself!
Chuck Butler