February 22, 2023
* dollar buying continues…
* taking away civil liberties… and privacy… and well, everything!
Good Day… And a Wonderful Wednesday… I have to say right off this morning, that I’m feel as though I’m missing something, not having the Pfennig Replies box working.. As I told you a week or so ago, there are technical reasons for the non-receipt of emails into the box… The powers that be, tell me that it will be fixed soon, but as of yet, it is still on the fritz… My beloved Mizzou Tigers pulled a win last night, that, in true honesty, they didn’t deserve to win, given they waited until OT to hi a 3 that counted… But, a win is a win, and after losing 2 straight, I’ll take the win! Our Blues lost again last night, and haven’t even been competitive since trading their captain, last week… Aliota Haynes & Jeremiah, greet me this morning with their classic rock song: Lake Shore Drive…
I know I’m begging to sound like a broken record, saying that the dollar continued to get bought yesterday, but.. it’s what it is, and there’s nothing I can spin to make it look good… (shoot Rudy, I’m not the government, here with books to cook!) Dollar strength, no matter how it was started, is dollar strength, and the currencies and metals all suffer… The BBDXY gained 4 index points yesterday, and Gold lost $6.50 on the day… Silver actually found a bid and gained 5-cents…Gold ended the day at $1,835.50, and Silver ended the day at $21.91..
The price of Oil was unchanged yesterday, which meant that it traded with a $77 handle to end the day, an over in the bond arena… the yield on the 10-year Treasury, rose to 3.935, and is looking like it’s next stop is 4%…
In the overnight markets last night…. The dollar buying continued… the BBDXY gained 1.5 index points overnight… Gold is up $3 in the early trading, while Silver has given back 3-cents… The price of Oil slipped by a buck and trades with a $75 handle this morning, and Bonds are back to being stuck in the mud, after their recent rise in yields… I see the bond boys saying, “That’s enough, no more for now”… Of course I don’t’ really know what they said, I just see the way the bonds are trading, and make my assumptions!
The Big News of the day yesterday, came from New Zealand, where the Reserve Bank of New Zealand, hiked rates 50 Basis Points to 4.75%… this rate hike, following the cyclone that hit the northern island last week, and left a lot of damage… But the RBNZ noted that there will be price spikes in the rebound of the island, and with inflation already running high… They hiked rates…
I made a BIG Deal about Mexico and their rate hikes yesterday, and today I’m making a BIG Deal about New Zealand’s rate hikes… The NZ OCR (official cash rate) is now 4.75%, which is equal to, or above the Fed Funds rate in the U.S., and yet it’s the dollar that keeps getting all the love from the markets because of their rate future… and at the same time, inflation in the U.S. continues to run at a level much higher than the Fed Funds rate… In my day as a currency and foreign bond trader, these are the things that made it interesting to trade, without interference, and trader sentiment… I’m just saying…
My longtime associate / friend, Addison Wiggin, sent me a link to a video yesterday, that’s quite interesting… It’s a video of a make believe fight between the ideals of Keynes, and the ideal s of Hayek… it was so interesting that I’ll supply the link to the video here: Fight of the Century: Keynes vs. Hayek – Economics Rap Battle Round Two – YouTube
Ok, longtime reader, Bob, sent me this, and I just couldn’t let it pass by without commenting on it, so here it is: “The reptilian annual World Economic Forum at Davos, where the masters of the universe meet to congratulate themselves on their benevolent dictatorship, is home to many sinister ideas. This year, one of the creepiest discussions of all was delivered under the guise of progress and productivity. Nita Farahany, a Duke University professor and futurist, gave a presentation at Davos about neurotechnology that is creating “brain transparency.” The new technologies, which Farahany says are being deployed in workplaces around the world … include a variety of wearable sensors that read the brain’s electrical impulses and can show how fatigued you are, whether you’re focused on the task at hand or if your attention is wandering. According to Farahany, thousands of companies have hooked workers ranging from train drivers to miners up to these devices already, in the name of workplace safety. But what we are really discussing is workplace surveillance. Farahany paints a picture of a near future in which every office worker could be fitted with a small wearable that would constantly record brain activity, creating an omnipotent record of your thoughts, attention and energy that the boss could study at leisure. Farahany acknowledges that there could be drawbacks here: “Done poorly, it could become the most oppressive technology we’ve ever introduced on a wide scale.” All of this raises the question: what exactly is your employer buying when they give you a paycheck? For bosses, the answer is simple: “Everything.”
Chuck again… OMG! First it’s digital currencies that will take away the last of our civil liberties, and now this? Please tell me this won’t happen!
That was a long non FWIW this morning… I just don’t know what to think any longer, that’s going to be a good thing for all of us…
Well, I have a quick quiz for you… Which currency is the lowest yielding currency? Well, if you said, the Japanese yen, you would get a Gold star! Or a happy face! The Japanese currency now has the lowest implied yield of 31 currencies analyzed by Bloomberg, and so guess what’s back en vogue? The Carry Trade! Talk about brining back a trad that used to dominate the markets, well, it’s back! Investors are using the yen to fund their purchases of higher yielding currencies… This Carry Trade was responsible for the wild trading in Aussie dollars and kiwi in the last weak dollar trend… That’s when we saw both of those currencies trade higher than $1.00!
So, pick a high yielding currency, ala kiwi, pesos, etc and watch how it gets bought as the other side of the sell of yen… This is going to be fun! I’m just saying…
The U.S. Data Cupboard today has the FOMC Meeting Minutes from their last meeting, when the opted to only hike 25 Basis Points… This is the meeting that Jerome Powell, FOMC Chairman, made sure the markets heard him, as he talked about how there was going to pain, and that interest rates needed to go higher… And that there would be no rate cut in 2023… At first the markets didn’t believe him, and kept trading like he didn’t say those things, but eventually, they have come 180 degrees, and come to agree with him…
To recap… The dollar continues to be bought, Chuck thinks he’s beginning to sound like a broken record! The Reserve Bank of New Zealand, hiked rates 50 Basis Points, to bring their OCR to 4.75%, I can see this in my strange mind… The RBNZ throws out their 50 Basis Point rate hike and says to the U.S. Fed… “I’ll see your 25 BPS rate hike, and raise you 25 BPS more”! Chuck goes off the rails this morning, with more stuff that’s not going to be good for us, private citizens! And the Carry Trade is Back!
For What It’s Worth… it was slim pickings for FWIW worthy articles this morning… I had to settle on this article from Reuters that appeared yesterday, and is about Russia dropping the last nuclear treaty with the U.S. and it can be found here: Russia’s Putin issues new nuclear warnings to West over Ukraine | Reuters
Or, here’s your snippet: “ President Vladimir Putin on Tuesday delivered a warning to the West over Ukraine by suspending a landmark nuclear arms control treaty, announcing that new strategic systems had been put on combat duty, and threatening to resume nuclear tests.
Nearly a year after ordering an invasion that has triggered the biggest confrontation with the West in six decades, Putin said Russia would achieve its aims and accused the West of trying to destroy it.
“The elites of the West do not hide their purpose. But they also cannot fail to realise that it is impossible to defeat Russia on the battlefield,” he told his country’s political and military elite.
Alleging that the United States was turning the war into a global conflict, Putin said Russia was suspending participation in the New START treaty, its last major arms control treaty with Washington.
Signed by then-U.S. president Barack Obama and his Russian counterpart Dmitry Medvedev in 2010, the treaty caps the number of strategic nuclear warheads that the countries can deploy.”
Chuck again… I shake my head in disgust, and fear that this will continue to be a show of arms, and then who knows what else this saber rattling will bring us?
Market Prices 2/22/2023: American Style: A$ .6819, kiwi .6226, C$ .7380, euro 1.0626, sterling 1.2087, Swiss $1.0774, European Style: rand 18.2601, krone 10.3342, SEK 10.3723, forint 360.19, zloty 4.4700, koruna 22.3026, RUB 75.39, yen 134.76, sing 1.3400, HKD 7.8459, INR 82.55, China 6.8953, peso 18.44, BRL 5.1623, BBDXY 1,247.70, Dollar Index 104.30, Oil $75.56, 10-year 3.94%, Silver $21.88, Platinum $954.00, Palladium $1,526.00, Copper $4.10, and Gold… $1,838.73
That’s it for today… Today is Ash Wednesday, the beginning of Lent, for us Christians… I went through the Shrove / Fat Tuesday stuff yesterday… I hope you bulked up! HA! A very warm day here yesterday, which is the opposite of what’s going on in the North across the country right now… Be careful up there! 3 more days until my first spring training game! It’s almost here! YAHOO! The return of baseball! I read an article the other day, talking about how baseball needed to appeal to the younger generation, because the younger generation believes the game is too boring and too long… Well, all I can say to that, is…They just don’t get the beauty of the game… The Temptations take us to the finish line today with their song: Papa Was A Rolling Stone… So.. go get your ashes on your forehead, and get ready for 6 weeks of not eating meat on Friday… When I was a young man, we didn’t eat meat on ANY Friday! Another case of making things easier for the younger generation! I hope you have a Wonderful Ash Wednesday today, and will continue to Be Good To Yourself!
Chuck Butler