February 3, 2022
* Currencies and metals have small gains on Wednesday
* The dollar rebounds in the overnight markets…
Good Day… And a Tub Thumpin’ Thursday to one and all! The days keep getting warmer here, and the thing that’s just as important, is the nights are staying warm, and not dropping in temperature. So, I’ve got that going for me! I watched the U.S. / Honduras World Cup qualifying game last night that was played in St. Paul Minnsnowta! And the temp during the game was 5… When I saw that my question was… “Who was the mental genius to schedule a game in Minnesnowta in February? “ I know what it’s like to play soccer in bone cold weather, for back “in the day” high school soccer was a winter sport… That was changed long after I was finished with playing soccer in bone chilling weather! The U.S. won the game… The Jefferson Starship greet me this morning with their song: Count On Me…
Well… The dollar began the day, down big, with over 4 points in the index lost, but by the end of day, the dollar had won back 1 of those lost points, and the BBDXY closed the day at 1,176.65… The euro remained above 1.13, so it had that going for it… Gold found a way to hang on to $5.60 to increase to $1,807.40… Silver added a whopping 2-cents on the day to close at $22.73… Both metals were stronger during the day, only to see the price manipulators come in and take a pound of flesh from both metals…
The price of Oil slipped back below $88 as our friends (NOT!) at OPEC announced that they would be keeping production levels the same… And bonds saw the 10-year’s yield drop a couple of BPS to 1.76%… The moves yesterday were small in all markets that I care about…
Not that I want to talk too much about the data cupboard up front, but there was a report in the data cupboard yesterday, that was mind blowing… The ADP Employment Report For January, was expected to show 200,000 jobs created in Jan. But instead of 200,000 jobs created, ADP reported 301,000 JOBS LOST! That’s right the number for January was negative… Ok, this doesn’t mean that the Friday’s Jobs Jamboree, from the BLS is going to be negative too… And right now the so-called experts are calling for 150,000 jobs created by the BLS… (notice how I worded that?)
But 301,000 negative jobs in January should have had a negative effect on the dollar yesterday, and it really didn’t… Bizarre, once again… But I can see the dollar bulls looking at that data and say, “we don’t follow the ADP, our bag is the BLS Jobs Jamboree”…
In the overnight markets last night… the dollar has rallied and is up over 2.5 points in the BBDXY, all the upward moves by the currencies yesterday morning have been wiped out. The BBDXY trades this morning at 1,179.27. Gold is down $5 to start the day, and Silver is down 32-cents… I don’t know for sure but my spider sense is tingling, and telling me that I had better walk away from the market screens today, and not pay attention to them… Uh-Oh… The price of Oil remains below $88, and bonds got sold yesterday to the tune of 4 BPS to trades this morning at 1.80% yield in the ten-year…
You know… that I’ve been telling you for years that this money printing that began in response to the 2007/ 08 financial meltdown in the U.S. was going to cause inflation eventually… And it took money printing on steroids, in response to the plandemic, that pushed inflation to the forefront… When the Fed/ Cabal/ Cartel make these monetary policies that they feel are best, and then they turn out to be not so good, and far from the best, everyone forgets that iy was the monetary policy that caused the problem because it was done years before…
And I know that I’ve been the boy who cried wolf regarding the rising debt in the U.S. but trust me on this folks, it’s been the main reason that the economy hasn’t grown for over a decade… So, the rising debt didn’t cause economic collapse, not yet, and it hasn’t caused a dollar collapse, not yet, but it has held down economic growth, while those other two things are percolating…
OK, I told you yesterday that we had passed the $30 Trillion mark on Tuesday… Well, yesterday, longtime publisher and author, Bill Bonner has this to say about this historic moment in time:
“The federal government now owes $23.5 trillion in debt to creditors and another $6.5 trillion to itself. Debt to creditors soared by $1.5 trillion over the last year alone, according to the Peter G. Peterson Foundation, a nonpartisan organization focused on addressing the country’s fiscal challenges.
“It does not make sense as a society to simply spend more than we take in on a permanent and growing basis,” said Michael A. Peterson, the group’s chief executive officer. “What that essentially does is place the burden onto our future and onto the next generation.”- Bill Bonner
Did you know, that the U.S. has added $24 Trillion of that $30 Trillion Current Debt total since 1999? For over 200 years we accumulated just $6 Trillion in debt, with most of that coming since the 80’s… And in the last 22 years, we did 4 times that amount… And when you add in Corporate debt the number climbs to $56 Trillion… I guess that doesn’t say a lot for our War on Terror, War on Drugs, War on Poverty does it? Or, as Bill Bonner says, “it certainly didn’t place stars of democracy on Iraq and Afghanistan” Just shows to go ya that it makes no difference how much bad money you can throw on bad ideas, it’s still a bad idea… And that’s all I’ll say about that!
But zero interest rates have been a boon to Corporations in the U.S. they get to borrow interest free… I wonder if they even still have to put up collateral on interest free loans? HA! And everyone thought that ZIRP (zero interest rate policy) was the best things since sliced bread… Well, until interest go higher, as they seem to be getting ready to do, and these Corporations have their loans come due, and they need to refinance at higher rates… See this is another bad policy by the Fed/ Cabal/ Cartel that is taking years to show its warts… But eventually all bad ideas come home to roost…
Of course for you, and me, the savers of the world, ZIRP has been hated, kicked, driven like a rental and everything else bad that we who depended on interest income had to say about ZIRP… It’s been an awful policy for us… And it’s something that former Kansas City Fed Head, Thomas Hoenig tried to explain to people back 12 years ago, about how everyone will get used to ZIRP, and it will be difficult to come off of, all the while hurting seniors and savers…
And now I’ll circle back to inflation and discuss the Fed/ Cabal/ Cartel’s response to it… Well, as you know they denied the fact that inflation was rising for months, thus putting them way behind the curve with regards to squelching inflation… If they had acted months ago, by now the markets would be on board with rate hikes, inflation would not be still rising, and well… They didn’t act months ago, and still haven’t acted… Another bas policy…
Last week, in the bizarre week of trading that almost caused me to walk away from the markets for a week, there were economists and analysts that were spouting off about how the Fed/ Cabal/ Cartel was going to hike rates aggressively… I said, “hogwash”… And then on Tuesday this week, two Fed Heads, Mary Daly, and Esther George tired to put that kind of talk in the trash, and repeated often that they have no plans to upset the economy with rate hikes… In other words, expect 25 BPS rate hikes…
If we get a couple more of the Fed Heads to put the aggressive rate hikes to bed, I think Gold will take notice and begin having better days than the $4 and $5 daily gains it has had so far this week.
But… Even with 25BPS rate hikes if you have enough of them, they begin to add up… The Bank of America (BOA), my friend Aaron’s favorite bank, NOT!, has projected that we will see 7 rate hikes this year bringing the Fed Funds rate to 3%… Uh-Oh… Somebody forgot to tell the Fed Heads or the folks at BOA about what happens to the U.S.’s $30 Trillion tab’s expenses when rates go higher… I’ve always told you that eventually the bond costs/ interest costs would become too large for the country to bear… At 4% rates, the interest rate costs on our tab would be $1.5 Trillion, and that’s 40% of the tax revenues in a good year… Not the kind of year we’re going to have this year, when all the roosters seem to be coming home to roost…
And we’re still waiting for the Fed/ Cabal/ Cartel… to act… They’re still in the “jawboning” stage, and it’s not taking effect, or swaying anyone… The markets need them to wet their powder, actually hike rates… And even then the markets are going to be left feeling like a jilted lover…
The U.S. Data Cupboard today has the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, which for the past few weeks have seen increases to the total each week… I suspect this week’s report to show the same… In addition, December Factory Orders will print…. Oil data… There’s nothing that’s more worthless, other than a FOMC meeting. HA!
To recap… The currencies were up strong in the morning, and then gave back a little of their daily gain to the dollar… Gold only gained $5.60, while Silver only gain 2-cents! The ADP Employment Report was mind-blowing, as it printed a negative 301,000 jobs in January… That’s right I said negative jobs in Janurary… And the dollar rallied a bit on that news… more bizarre trading folks… Chuck goes through some thoughts on inflation, the debt, and how badly the monetary policies of the Fed/ Cabal/ Cartel have been. And in the overnight markets the dollar is getting bought hand over fist, and Chuck thinks he should step away and not watch what goes on today… Hmmmm…..
For What It’s Worth… The Good Folks at GATA sent me this link to the article in the FWIW section today… It’s an article about how Gold keeps getting pushed above $1,800 and the thoughts on who’s doing that, and it can be found here: Looks Like There’s a Whale Snapping Up Gold Bullion Below $1,800 (yahoo.com)
Or, here’s your snippet:” Spot gold is again bobbing along near $1,800 an ounce, as it has been since mid-2020. The stickiness of that level, particularly as fundamentals turned more bearish, suggests there’s a big buyer somewhere in these waters.
Since breaking above the round number in July 2020, the gold price dipped below it 19 times on a closing basis, only to regain its footing. In the past year, the modeled value of gold, based on a regression study that includes the dollar, real rates and ETF holdings, dropped nearly 10%. Yet the metal’s price only fell around 2%. Clearly, there is a big buyer who considers the metal a long-term hold.
Such whale activity, which shows up neither in ETF holdings nor in futures positioning, would require a substantial buyer, accumulating in size in the London over-the-counter market. Yet vault holdings reported by the London Bullion Market Association, which include both ETF and some central bank-owned metal, show only a fractional increase in the year through December, from 307 million to 309 million troy ounces.
That would suggest that whoever is buying is able to buy in scale, leave little footprint in the market and then take delivery and store the metal in secure, invisible vaults. And that points strongly toward a sovereign buyer.
Central banks normally declare to the IMF the amounts of metal they have on their books. But there are precedents where this has been done with some delay. Between 2009 and 2015, China reported no change in holdings, only to reveal that it had bought 53 million ounces of metal over the period.”
Chuck again… I think I had talked about this trading in Gold yesterday, or was it earlier today? Sometimes when writing so much I get confused as to when I said something! I agree with the article that it’s probably a Central Bank somewhere, doing the sneaky trading… Now, if only we could get a couple more whales participating, that would wipe out the price manipulators!
Market Prices 2/3/2022: American Style: A$ .7120, kiwi .6642, C$ .7974, euro 1.1279, sterling 1.3583, Swiss $1.0834, European Style: rand 15.3151, krone 8.8086, SEK 9.1975, forint 313.52, zloty 4.0153, koruna 21.3907, RUB 76.27, yen 114.91, sing 1.3479, HKD 7.7940, INR 74.86, China 6.3612, peso 20.61, BRL 5.2981, BBDXY 1,179.27, Dollar Index 96.09, Oil $87.23, 10-year 1.80%, Silver $22.41, Platinum $1,030.00, Palladium $2,456, Copper $4.43, and Gold… $1,802.00
That’s it for today… As we head to the first weekend of February, the folks back home are getting snowed on again today… It’s good for them! HA! My drinking hole buddies were texting the amounts of snow each one had in their yards, and I was tempted to respond: “no snow here, just 74 and sun”, but then thought that would be rubbing it in, and I’ve not done that in the 6 years here, so I refrained from doing that! Friends that we see each winter in Feb. (not last year of course) Mike and Linda from Jersey arrived this week, and they were glad they got out of Dodge! Our good friends, Pete and Karen, moved out of their condo, and bought a house about 15 miles from here… UGH! Oh, I mean good for them! No NFL playoff games this weekend, with next weekend being the Super Bowl…The song for our getaway song today goes out to my longtime colleague, going back to Mark Twain Bank, and latte buddy, Michelle Boschert, for the sone is from the Beatles, and its title is: Michelle… I hope you have a Tub Thumpin’ Thursday today, and Please Be Good To Yourself… Be Positive, Test Negative!
Chuck Butler