February 16, 2023
* currencies and metals get whacked on Wednesday
* Sudan drops the dollar…
Good Day… And a Tub Thumpin’ Thursday to one and all! What an absolute beautiful day here in S. Florida yesterday… I’m told by the weather people on TV that we could experience near record highs the next two days… YAHOO! I walked a tiny bit further yesterday, getting to 2,500 steps… baby steps, it’s going to take me, for I have been very inactive for some time… I won’t make any excuses, although I have them lined up in case anyone ever wants to hear them! HA! My SLU Billikens played Davidson late last night, for me anyway, the game was in St. Louis, and the Billikens won a close game until the end. This team started the year on a roll, but since their fast start, they have run into a few roadblocks, but now’s the time to get it back in gear, ahead of the A10 tournament… Otis Redding greets me this morning with his version of the Beatles’ song: Hard Day’s Night…
For some reason, I was thinking more about the Gov’t’s ability to pay things like Social Security, after yesterday’s rant in the Pfennig… I don’t know if you remember this or not, but years ago, I used to talk about how for the next 17 years, 10,000 Baby Boomers would retire each year… Well, I started doing the math, and in 2031 the last of those Baby Boomers will reach retirement age. That’s 8 years from now, which means for the next 8 years, 10,000 Baby Boomers will retire each year, drawing more strain on the Gov’t’s ability to pay them the money they contributed to the fund all those years…
OK… onto other things… The dollar kicked some tail and took names later yesterday… The BBDXY gained more than 8 index points on the day. The euro dropped back below 1.07, and the currencies across the board took a shot to the mid-section, and it left a mark! You’ll see how badly the currencies were beaten down yesterday, when you get to the market prices roundup.. With the dollar so strong, there was no way in hello operator, (I won’t go through all that again today) that Gold found a bid, and then with Gold starting the day down, the price manipulators piled on once again… Gold lost $17.70 on the day to close at $1,837.30, and Silver lost 21-cents to close at $21.71…
The price of Oil was pretty Steady Eddie and ended the day yesterday trading with a $79 handle… And Bonds continue to see their yields getting marked up, and their prices marked down… The 10-year Treasury had a yield of 3.80% to end the day yesterday…
In the overnight markets last night… the dollar buying ended, but not with a bam, more a whimper, as the BBDXY lost 2 index points overnight… This yoyo that the euro is on right now is giving me severe dizziness… The euro is back above 1.07 this morning… Back and forth, back and forth, walk the dog, around the world, the sleeper, all yoyo tricks being played by traders with the euro… After the armegeddon that the PPT and the price manipulators caused last week, the Aussie dollar’s rise was interrupted, but appears to be water under the bridge now, and the A$ is back to rallying…
The price of Oil is steady Eddie again overnight, and continues to flip-flop between $78 and $79. And Bonds are… well, they are bonds, and they don’t have a good future… That’s all I’ll say about that here… But Matthew Piepenburg had plenty to say about the dire straits bonds are in, in his video that I provided you yesterday…
Yesterday, was the birthday of St. Louis! Yes, the city was founded on Feb 15, 1764 as Auguste Chouteau began building St. Louis. I a decade or so ago, I would have thought the city was going to just shrivel up and die… But, there’s been a revival and the young folks, like living in the city… Well, they can have it, because the only reason I go into the city any longer is to attend a Cardinals Baseball game, Blues Hockey Game, or Billikens Basketball game… And I don’t do that regularly…
I know, I know, you didn’t tune in this morning to hear about the city of St. Louis! But, it’s where I was born, and brought up, and lived until moving to Des Moines Iowa in 1978…
Circling back to the talk above about the U.S. Gov’t finding it difficult to pay anything other than bond servicing costs… Long time reader Bob, sent me a link to this info: “The United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously forecast, as a result of rising costs for interest payments, veterans’ health care, retiree benefits and the military, the Congressional Budget Office said on Wednesday.”
That would put us at $50 Trillion in Debt… AYE, YAY, YAY… or however you spell that! Does anyone really believe we as a country will reach that level of debt before the financial system we currency use, hasn’t collapsed, under the weight of the current debt? The Debt Clock tells me that in 4 short years, our debt will be $44 Trillion… So, I think I trust the Debt Clock’s math, more than I trust the Congressional Budget Office… for they are part of the Gov’t, right? And… I don’t think we’ll make it to $44 Trillion either!
In news that got swept under the carpet… The good folks at GATA sent me this: South Sudan’s government has suspended the use of the U.S. dollar and instead directed all transactions be executed in the local currency, the South Sudanese pound. Apparently, in the current time, U.S. dollars are used for just about everything, so a BIG change is coming here…
I know, I know, this is just Sudan, not Japan! Yes, but one country drops the use of the dollar, begets another country, begets another country, and so on… So, that’s why I wrote about it…
The folks at Morgan Stanley, think the euro is in for some appreciation VS the dollar, I found this on Bloomberg.com, so let’s listen in to what they have to say, “A closely-watched interest-rate metric has convinced Morgan Stanley strategists that the euro area can withstand further increases in borrowing costs, boosting their bullish view on the single currency.
The near-term forward spread — the difference between the three-month rate and where investors see it in 18 months’ time — is inverted for markets including the US and New Zealand, but remains roughly flat for the euro zone after declining in January. That’s a sign that the European Central Bank can keep cranking up interests to tamp down on inflation without having to worry too much about the economic impact, said David Adams, head of Group-of-10 FX strategy at the bank.”
Chuck again… take that with how ever many grains of salt that you wish, for something here is making my spider sense tingle… Could it be that age old saying that when a Broker House touts something, it means they are long the item, and they need other s to join in to push up the price?
The U.S. Data Cupboard yesterday was pretty busy… First of all we had Retail Sales for January, and this data surprised the markets with strength, as it posted a 3% gain… So, U.S. consumers were tapped out in December (retail sales were negative), and they bounced back in January and bought the farm? I find this to be somewhat unbelievable… Could be more data massaging and cooking going on here, I get that feeling… Because the production side is hurting badly, The Empire manufacturing index was negative, Industrial Production after printing negative in Dec, was flat as a pancake (Head East), in January, ever since Capacity Utilization hit 80% a couple of months ago, it has dropped each month since, with January’s print showing a 78.3% number… So, let’s just go with the BHI, which said that Retail Sales would be disappointing, because that narrative plays well in the sandbox with the production numbers! Yeah, that’s the ticket and I’m sticking with it! Did I ever tell you that my first wife was a young Elizabeth Taylor?
To recap… The dollar kicked tail and took names later yesterday, with the BBDXY gaining 8 index points! Gold got whacked falling 17.70, and Silver falling 21-cents on the day… UGH! The price of Oil was Steady Eddie, and bonds continued to see their yields rise… Crazy day, for sure! Well, Morgan Stanley likes the euro… At least someone other than me does! Sudan drops the dollar in all terms of trade within the country… Chuck continues to worry about the debt in the U.S. and with years of Baby Boomer still to retire, the pressure on the Gov’t to keep paying them is in question..
For What It’s Worth… I don’t know if you’ve followed the story of Trafigura, and how they got scammed and it cost them $577 Million… But this is an article that talks about the mistakes they made, and how more businesses should be doing more diligence… And it can be found here: Trafigura $577 Million Nickel Scandal Should Be a Wakeup Call – Bloomberg
Or, here’s your snippet: “When Russia invaded Ukraine last year, the world got a glimpse of what awaits supply chains in the future. Sudden supply constraints meant that the prices of many commodities, including metals and rare earths, spiked. Nickel prices, for example, rose by 90% in the first weeks after the invasion.
Many of these materials have specific roles to play in a low-carbon future: The International Energy Agency has predicted that, if the green transition takes hold, demand for nickel might increase 20 times. Most national governments have woken up to this reality and have started to look for ways to secure their supplies of critical materials. Yet, as we have just learned from commodity trader Trafigura Group’s loss of $577 million to possible fraud, the private sector is relatively unprepared for what the future may hold.
It is easy to look at some of these demand projections, do a quick back-of-the-envelope calculation, and predict easy profits. That would be a mistake. When demand in a sector grows by an order of magnitude and its total value increases manifold — rare earths alone will quintuple in value in the coming decades, according to the IEA — then the sector must take a closer look at how it organizes and governs itself.
Trafigura seems to have lost more than half a billion dollars mainly because it failed to check what was in the shipments against which it was lending money to companies associated with Indian metals trader Prateek Gupta. Internally, many questions will be asked: For example, why did the company keep doing business with Gupta even after he became the subject of a fraud investigation in India? Why did it agree to be paid for lending money against nickel shipments in yet more nickel?”
Chuck again… The article makes a good point, saying, “Trafigura Scandal Should Be a $577 Million Wakeup Call…. If traders try to keep up business as usual even as the value of critical metals and minerals skyrockets, they are going to face many more attempts at fraud.”
Market Prices 12/16/2023: American Style: A$ .6910, kiwi .6285, C$ .7470, euro 1.0702, sterling 1.2051, Swiss $1.0843, European Style: rand 18.1360, krone 10.2070, SEK 10.4043, forint 356.95, zloty 4.3614, koruna 22.1246, RUB 74.81, yen 133.85, sing 1.3340, HKD 7.8494, INR 82.71, China 6.8560, peso 18.57, BRL 5.212, BBDXY 1,240.48, Dollar Index 103.69, Oil $78.51, 10-year 3.79%, Silver $21.56, Platinum $919.00, Palladium $1,407.00, Copper $4.02, and Gold… $1,837.16
That’s it for today… and until next Tuesday, for Monday is President’s Day Holiday! All the remaining Cardinals pitchers and catchers, not going to report to WBC teams, reported to spring training yesterday at Roger Dean… That means the first game is now just 9 days away! Most of the players are already in camp, so the dates are just ceremonious… I can’t wait to walk into the stadium the first time, smell the grass the aromas of hot dogs on the grill, the sounds of baseballs hitting mitts, and other things… Roger Dean stadium is going to be going under $108 Million worth of updates after spring training ends this year, and the updates will take over a year go complete… This means more than the 6,500 seats in the stadium will then be available… it’s been tough to obtain season tickets right now… I’m glad I bought mine over 10 years ago! Earth, Wind, and Fire takes us to the finish line today with their song: After The Love Is Gone… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and that you continue to Be Good To Yourself!
Chuck Butler