August 3, 2022
* currencies and metals get sold on Tuesday
* American consumers are racking up the debt…
Good day… And a Wonderful Wednesday to you! What a disappointing trade deadline for my beloved Cardinals… Sure they received two starting pitchers that they needed, but neither one of them are what I would call a bonafide starter! We traded away a young pitcher for an old pitcher, and a gold glove centerfielder, every day player for a pitcher I had never heard of, who will pitch once a week! I find this performance by our General Manager, to be very disappointing… Oh well, we carry on despite our shortcomings! It was a much nicer day here yesterday, and I was able to sit outside for much longer and read, have my lunch, etc. Chicago greets me this morning with their song: Old Days…
Good times I remember! Oil days, times I’ll always treasure! Yes, we alll wax nostalgic at times, and hearing that song had me thinking about times in the past… Times when fundamentals ruled the markets and you could place trades based on a country’s fundamentals or outlook on fundamentals… The great Stevie Wonder had a song titled: I Wish… I wish those days would never stop… Well, unfortunately, they did, and markets are ruled by trader sentiment these days, and that sentiment may or may not take into consideration the fundaments in place, but from what I’ve seen they definitely do not!
OK… I beat around the bush long enough here… The dollar came back with a vengeance yesterday, with the BBDXY gaining 7 index point! Wait, What? Yes, the dollar buying was fast and furious, and never stopped to take a pause for the cause. So, just when I thought that dollar traders had finally gotten the memo about how a currency shouldn’t rally during a recession, with inflation soaring, the prove me wrong again! I have to say that to me, this reeks of PPT participation… A move that strong in one day had to be PPT Participation, there’s no two ways about it!
On Monday of this week, I noted that the dollar had been weak while I was gone, but wondered how long it would be before the PPT started spending some of their treasure trove in the Exchange Stabilization Fund. Well, I think, no make that I’m sure I got my answer to that question yesterday!
And Gold? Well, the boys in the band showed up at the COMEX with arms full of short Gold paper trades yesterday, and well, we all know what happens when they do that! Gold lost $12 yesterday to close the day at $1,761.20, and Silver also saw short Silver paper trades in bunches, and Silver lost 38-cents on the day to close at $20.06
It was an ugly day in the markets… I might have been a beautiful day outside, inside the ugly was being spread around and it was not pretty to watch.
In the overnight markets last night… There was some slippage in the dollar, but not anything close to the gain it had yesterday. The BBDXY lost 2 index points overnight, and Gold is up $5 in the early trading, while Silver has fallen back below $20 this morning. Bonds got sold yesterday and through the night, and the yield on the 10-year rose to 2.75%, from yesterday morning’s 2.66%…
Well, the data for 2nd QTR Credit came in yesterday and it showed that credit card debt increased by 13% in the quarter, which was the largest gain in credit card debt in 20 years! Do you see what I’m seeing here? That folks are paying higher prices for their gas, groceries and giggles, and putting it all on their credit cards… And I’m sure these banks that provide the credit cards, are licking their chops, because they’re getting ready to hike the rates they charge on the debt they carry, to the atrocious levels they were before… I don’t see how this doesn’t turn into tears, folks… But then that’s just me!
Oh, and that data on 2nd QTR Credit Card Debt came to us curtesy of the Fed NY! And they didn’t stop there! The total Consumer Debt for the 2nd QTR for Americans IOU totaled $16.15 trillion through the end of June, good for a $312 billion — or 2% — increase from the previous quarter
The way consumers are spending money they don’t have, and piling up debt, you would think that they know something… . That the Gov’t will forgive their debt… Yeah, good luck with that!
So, what the heck has happened to the currency and metals rallies that were going on while Chuck was gone? They are proving to be nothing more than a dead cat’s bounce… (no cats were harmed here, it’s just an old saying in the markets) In other words, the rallies were nothing more than a mini-correction, that didn’t last… So much for my hopes and wishes that Gold was ready to take off to higher ground…
The best laid plans of mice and men, eh? Ok, let’s move onto to something else…
The markets were on edge yesterday, as Pelosi went ahead and visited Taiwan to assure them that the U.S. wouldn’t abandon them. She went ahead and visited Taiwan after the Chinese had said that she shouldn’t make that visit, without provocation… Well, nothing happened yesterday, other than China announcing some tariffs on Taiwan exports to China… But that doesn’t mean that something won’t happen eventually… As I said yesterday in my Chuck Again section of the FWIW, that I don’t like the direction this is all going for the war mongers of D.C.
The U.S. Data Cupboard yesterday had the Job Openings and Job Quits data for June… Job openings plunged in June to their lowest level since September 2021 in a potential sign that a historically tight labor market is starting to slow.
The total of employment vacancies fell to about 10.7 million through the last day of June, a decline of 605,000 or 5.4%, according to the Job Openings and Labor Turnover Survey released Tuesday by the Bureau of Labor Statistics. I have to think that this is a sign of the slowing of the economy… But that won’t mean anything to the dollar traders…
But… The Job Quits data showed that another 4.3 Million people quit their jobs in June… This data has been steady Eddie for months now, showing the same 4.3 Million Jobs Quits a month…
Today’s Data Cupboard will show us the color of the July Factory Orders and Capital Equipment Orders… Now these are REAL economic numbers folks… The economy can’t grow without Capital being put to work buying buildings, desks, computers, etc. This is how an economy grows, and not on Corp. buybacks of stock…
To recap… The dollar got a boost from someone or some party yesterday and the BBDXY gained 7 index points! Gold got sold to the tune of $12 and Silver lost 38-cents on the day… Chuck called it an ugly day for the markets, as bonds also got sold by the bushel full! Chuck calls the rallies in metals and currencies while he was gone, a dead cat’s bounce… nothing more than a mini-correction that had no legs… So, it’s back to square one with dollar buying…
Before I head to the Big Finish today I want to say RIP to the great Vin Scully, who passed away yesterday at the age of 94… other than Jack Buck I would listen to a Vin Scully broadcast above all others!
For What It’s Worth… Well, we have 6 more weeks of Fed Head comments about the direction of interest rates, are you ready for that? I’m not! No way! Please tell it ain’t so Joe! So, if that’s what’s in our future, we might as well get the first shot of comments… This article can be found here: Fed’s Mary Daly says ‘our work is far from done’ in raising rates (cnbc.com)
Or, here’s your snippet: “The Federal Reserve still has a lot of work to do before it gets inflation under control, and that means higher interest rates, San Francisco Fed President Mary Daly said Tuesday.
“People are still struggling with the higher prices they’re paying and the rising prices,” Daly said during a live LinkedIn interview with CNBC’s Jon Fortt. “The number of people who can’t afford this week what they paid for with ease six months ago just means our work is far from done.”
Separately, Chicago Fed President Charles Evans opened up the possibility of another large rate hike ahead, but said he hopes that can be avoided, with the Fed being able to bring down inflation without having to use harsh policy tightening.
So far this year, the central bank has raised its benchmark interest rate four times, totaling 2.25 percentage points. That has come in response to inflation running at a 9.1% annual rate, the highest level since November 1981.
The Fed in July raised its funds rate 0.75 percentage point, the same as it hiked in June. Those were the largest back-to-back increases since the central bank started using the funds rate as its chief monetary policy tool in the early 1990s.
But Daly cautioned that no one should take those big moves as an indication that the Fed is winding down its rate hikes.”
Chuck Again… Oh great one Fed Head says that their work isn’t done, and the other says, that it is almost done… Just what we need… Fed Heads not singing from the same song sheet!
Market prices 8/3/2022: American Style: A$ .6931, kiwi .6264, C$ .7774, euro 1.0191, sterling 1.2180, Swiss $1.0425, European Style: rand 16.7121, krone 9.7204, SEK 10.2203, forint 388.79, zloty 4.6140, koruna 24.1783, RUB 60.81, yen 133.05, sing 1.3810, HKD 7.8500, INR 78.98, China 6.7518, peso 20.66, BRL 5.2797, BBDXY 1,271.19, Dollar Index 106.24, Oil $93.17, 10-year 2.75%, Silver $19.94, Platinum $901.00, Palladium $2,060.00, Copper $3.52, and Gold… $1,766.60
That’s it for today… A shorter version of the Pfennig this morning… I woke up at 4 am, and couldn’t go back to sleep, so I just got up and wrote, and at that hour there wasn’t much out there… So, there you have it! My beloved Cardinals beat the Cubs last night 6-0.. The Cardinals are 2 games out of 1st place… They can’t be losing to teams with losing records like the Cubs, Pirates and Reds… Tomorrow, will be Delaney Grace’s 15th birthday! She’s in High School now! Can you believe that time has flown by like that? Next year she’ll be driving! UGH! She sure makes me feel old! Oh well… The Doobie Brothers take us to the finish line today with their song: Another Park, Another Sunday… I hope you have a Wonderful Wednesday, and please remember to Be Good To Yourself!