July, 5, 2022
* Currencies & metals get taken to the woodshed…
* Political agendas, Clueless Fed Heads, and more today…
Good day… And a Tom Terrific Tuesday to you! Well, how was your Independence Day Holiday? We had a rainy weekend here, so a lot of plans to be at pools, patio BBQs, and whatever, had to be scrapped, or dodge the raindrops! Well, I saw history on Saturday, when 4 Cardinals batters hit home runs consecutively, in the first inning! In the history of baseball, that has never happened before! And then we lost 2 of 3 to the Phillies. UGH! Joey Chestnut won the hot dog eating contest for the 15 year in a row yesterday, and I cooked some killer bbq chicken breats for the family on the 4th! The rain stopped and it brought on the heat… But overall it was a fantastic holiday weekend for me! The great Al Green greets me this morning with his song: Love and Happiness…
Before we go any further this morning, Pfennig Tradition calls for a song to start July… There I was, on a July Morning, Looking for love
With the strength of a new day dawning, And the beautiful sun… courtesy of Uriah Heep… Now, onto the markets, economies, dolts, and other things that come to my attention!
The dollar didn’t continue to get bought on Friday last week, as there was some thought put into what traders were doing… for once! The BBDXY lost 3 index points on Friday from Thursday, and the euro climbed back above the 1.04 handle… Bonds continued to rally with the 10-year Treasury’s yield falling to 2.97%… I have to admit that I’m surprised at the rally in bonds, but, it does go back to an old thought in the markets that when stocks get sold, bonds get bought, and stock sure have been getting sold in recent weeks… I read last week that the stock market performance so far this year has been the worst 6 months in a long time… The price of Oil was steady on Friday trading with a $108 handle, while Gold gained $5.50 to close the week at $1,814.00, and Silver gained 35-cents on Friday to end the week at $21.01…
It had not been a good week for Gold & Silver, and I have to think that some of that was due to stock holders having to sell their profitable holdings to pay off their margin calls… We saw this same thing going on in 2008, and I’m sure it’s going on again… in 2008, the stock holders sold Gold to offset their stock losses, but after a week or so of that, we saw Gold recover, and not be subjected to that selling any longer… Let’s hope history repeats itself, or as I’ve said before, history is in the same ballpark again…
In the overnight markets last night… All of Friday’s gains in the currencies and metals were wiped out in one overnight session! The BBDXY has gained over 8 index points and the dollar has pushed the euro down to trade with a 1.02 handle… Shoot Rudy, even the Russian ruble got caught up in the dollar buying, and trades this morning with a 61 handle! Just last week, the ruble trades with a 52 handle! This is an all-out assault by the dollar on any non-dollar asset classes…
Gold is down $13 in the early trading and hovers just above $1,800, and Silver has dropped below $21 again this morning, with Silver losing 15-cents in the early trading. The price of Oil, which had gained $2 late last night, gave that up overnight, ad trades this morning with a $108 handle… And Bonds… The 10-year’s yield has dropped further this morning, to 2.91%…
Eurozone inflation hit a record of 8.6% last month, and if that’s not enough fodder to wet the Eurozone’s powder (hike rates) I don’t know what will move them to do so! If it were left up to Germany’s Bundesbank, interest rates would be been hiked long ago, but that’s not how things work in the Eurozone/ European Central Bank, and they have drug their collective feet with regards to hiking interest rates.. This has really affected the value of the euro. Just last month when it was thought that the ECB would hike rates, the euro rallied strongly, only to see that peter out when the ECB left rates negative…
Look what a rate hike did for the Swiss franc…. After nearing parity with the dollar, the France bounced off the mat and traded over 1.04 last week! The way I see this is that traders want to sell dollars and buy other currencies, but just can’t when the Big Dog, euro won’t play ball with them and hike rates…
In a case of you won’t believe what you just read… I give you Fed Chairman, Jerome Powell speaking last week in Spain, and saying, “I think we now understand better… how little we understand about inflation. This was unpredicted. I was looking at the time of our June meeting from one year ago. Of the thirty-five people who filed, with the survey of professional forecasters, thirty-four of them had inflation below four percent for the last year. And of course it was way above four percent.”
You’ve got to be kidding me right? That all those folks at the Fed didn’t have a clue that their money supply was causing inflation? I’ve said this before, that either they were clueless and for that they all should be fired, or they knew and that’s even worse,.. It now appears that they were clueless, therefore they should all be fired! I really don’t see how these folks maintain their jobs! If I had been so wrong about something so important in my job back when I held a job, I would have resigned myself, and not waited for the axe to fall on me! But then I do believe I am an honorable person, and that pretty much removes the Fed Heads from that category1
I got so darned upset reading this note on Sunday… Let me see if it upsets you as much as it upset me…
“The comments were made by Biden advisor Brian Deese during a CNN interview when he was asked about the cost of living crisis.
“What do you say to those families that say, listen, we can’t afford to pay $4.85 a gallon for months, if not years?” the host asked Deese.
“This is about the future of the Liberal World Order and we have to stand firm,” Deese responded.”
The response to this statement was awesome, here it is: “Countless Americans couldn’t care less about preserving the “liberal world order” in support of Ukraine, and would undoubtedly rather put America first.”
Chuck again, so… we have to suffer for some political agenda? Give me a Break! Throw me a bone! This has got to end! Most people in this country cannot afford to pay $5 a gallon for gas, now or even into the future! Oh, I hear the tree huggers saying, “then why not buy an electric car?” Well, let’s see… if the person cannot afford $5 gas, they certainly don’t have the means to buy a $50,000 electric car, now do they? Or for that meme, a $25,000 electric car!
I shake my head in total disgust at this whole shootin’ match, and I would think you would too… but then I can’t think for you… so I am somewhat at the mercy of you dear readers, to agree with me on that…
Dave Gonigam at the Five Minute Forecast, sent me note last week that Banks are speaking out of both sides of their mouths… Witness Goldman Sachs saying, “ That fears of a U.S. Recession are overblown”, but then sending out pamphlets to their clients advising them how to deal with the coming recession…
What to do, what to do with knuckleheads like that, eh? Again, I shake my head in disgust…
Good friend Dennis Miller sent me this on Saturday, and I just had to include it in today’s Pfennig… It’s a quote from former President Ronald Reagan who said< “ We don’t’ have inflation because the people are living too well, we have inflation because the Government is living too well”
I say, right on!
Speaking of a recession… The Atlanta Fed has slashed its forecast for Q2 GDP growth to -2.1%…. You may recall that the 1st QTR GDP was -1.6%, so if the Atlanta Fed’s forecast holds true, that would mean that we are in a recession…
And if that happens, then what does that do to the Fed/ Cabal/ Cartel’s interest rate forecasts? Well, I told you a month ago that I thought that the Fed would end up scrapping their rate hikes, and begin printing currency again before we got to 3% interest rates… And it now appears that to be the case… as interest rate expectations are dropping like flies!
The U.S. Data Cupboard late last week, had the June ISM, manufacturing index, and it showed a larger than normal drop to 54, from 56 in May… And again I bring this up, that I still don’t believe the Durable Goods data that printed last week… Tsk, Tsk,
The Data Cupboard will get back to printing real economic data this week, and it begins today with the June print of Factory Orders… Then we will wind through the week and end up on Friday with the Jobs Jamboree… Which, right now is expected to show 250,000 jobs created in June, with the word “created” being the key word there… For one never knows what the BLS has up their sleeve, ala Bullwinkle!
Speaking of the BLS… I received a letter last week, from the BLS… I thought when I saw the envelope that they were writing me to say that I should back off calling them names in the Pfennig… But upon furtherrr review, it was just a letter asking me to participate in a housing cost survey… No thanks, I have nothing to add to that data…
To recap… The currencies and metals enjoyed one day in the sun on Friday, last week, but the overnight markets had the dollar making an all-out assault on non-dollar assets, with the BBDXY gaining over 8 index points, and Gold getting sold, along with Oil… But Bonds continue to rally, do the bond boys know something we don’t? I would venture to say they do, and they aren’t telling us either!
For What It’s Worth… I don’t often do this, but today’s FWIW article comes from the Daily Reckoning Australia, and it’s about the ineptness of the Fed Heads, and it can be found here: Fed Up with These Serial Bubble Blowers – Daily Reckoning Australia
Or, here’s your snippet: “
Any employment ad for the Fed should have in big, bold type…DO NOT apply if you have real-world experience.
When all their adult working life has been spent in an intellectual bubble, it’s little wonder the decision-makers in this institution have such an appalling track record in long-term economic management.
The reason we’ve experienced three historic asset bubbles in the last 25 years is due to PhD groupthink.
How anybody thinks these clueless, conceited, career academics — the ones responsible for creating the ‘everything bubble’ — have the skillset to manage a ‘soft landing’ is beyond me. They are completely and utterly incompetent.
Their world is one of neatly calibrated models.
Real-life scenarios involving chaos, unintended consequences, unbridled greed/fear, and unforeseen out-of-left-field reactions are not something they can easily relate to in their perfectly simulated and cloistered world.”
Chuck again… This article goes through the employment listings for each Fed Head, and I’ve got to say… “It’s no wonder, we’re in this mess”
Market Prices 7/5/2022: American Style: A$ .6794, kiwi .6156, C$ .7730, euro 1.0299, sterling 1.2028, Swiss $ 103.60, European Style: rand 16.4183, krone 9.9601, SEK 10.4721, forint 394.70, zloty 4.6022, koruna 24.0349, RUB 61.63, yen 135.97, sing 1.4025, HKD 7.8467, INR 79.37, China 6.7031, peso 20.37, BRL 5.3295, BBDXY 1,273.14, Dollar Index 106.14, Oil $108.09, 10-year 2,91%, Silver $19.86, Platinum $875.00, Palladium $1,932.00, Copper $3.58, and Gold… $1,801.44
That’s it for today… A 2 1/2 hour rain delay in Atlanta last night didn’t help my beloved Cardinals, as they lost to the Braves… No Pfennig on Wednesday this week, as it’s time for my monthly visit to my oncologist. But I’ll be back on Thursday, God willing, that is… Little Evie was here yesterday, and even at 2 1/2 years old, she’s already learning to swim, and she’s fearless! I’m taken back by the dollar’s assault in the overnight markets, last night… This is getting out of control! Well, we’re supposed to have temps over 100 this week… But no records will be set… I can’t believe this, but the rev. Al Green takes us to the finish line today with, his version of: How Can You Mend A Broken Heart… Al Green at the beginning and at the end of the letter today! It’s going to be a good day! I hope you have a Marvelous Monday, today, and please remember to Be Good To Yourself!
Chuck Butler