March 15, 2023
* Currencies & metals see profit taking on Tuesday
* Banks in Europe have the same problems…
Good Day… And a Wonderful Wednesday to you! And Welcome to the Ides of March! The cold front that moved through Monday night, left temps in the high 70’s yesterday, beautiful! Even with the ocean acting up, it has still maintained some beautiful colors in recent days… And the sea breezes have been wonderful too! I love it here, in the winter, and now next week the early spring… I took Kathy to the airport yesterday evening, and now I’m all by myself for a couple of days until. Dawn, Jerry, Delaney, and Everett come to see me on Friday afternoon… Speaking of Friday, it will be St. Patrick’s Day! Go Green! Kiss me, I’m Irish, and all of that! I’ll be wearing my special St. Pat’s Day shirt, it’s a real winner! Wild Cherry greets me this morning with their song: Play That Funky Music
Well, I guess when you have two days of major buying of Gold & Silver, and major selling of the dollar, that there was bound to be some profit taking from the short term investors, and that’s what I believe we saw yesterday… This from Kitco: “Gold prices are weaker in midday U.S. trading Tuesday, on a normal downside correction following strong gains posted Monday.” So… for the record, Gold lost $10.40 for the day, remaining above $1,900, and ending the day at $1,904.30, and Silver lost 12-cents on the day to close at $21.7… The BBDXY was up for the day in the morning, but gave way to selling in the afternoon, finally ending up down 2 index points at 1,243…
The Big News yesterday was the stupid CPI remained above 6% on an annual basis in February… Like I’ve said before, inflation is sticky, and it will take all the rate hikes that the Fed Heads can muster/ stomach, to defeat inflation… There are still those cry babies out there in the stock jockey land, that continue to whine and cry about the high interest rates, and that the Fed Heads should pivot… I really don’t agree with them, because they are only looking out for their own investment portfolios, or their ability to sell more stocks…
I would warn them that they should be careful what they wish for… In the Bonner Private Research newsletter yesterday, Dan Denning had this to say: “Remember, history shows that recessions and stock market corrections usually begin AFTER the rate hiking cycle, when the Fed CUTS.”
Chuck again… WOW! Now that’s something that we all should take into account, for I obviously hadn’t researched that previously, so it was news to me!
In the overnight markets last night… the dollar got bought like funnel cakes at a State Fair! The BBDXY gained 8 index points overnight, and has the feeling that currency traders know something that we don’t! And it can’t have anything to do with the solvency of U.S. Banks, because, in my opinion, that’s tenuous at best… Gold has eked out a gain in the early trading today of $3, and Silver has added 12-cents this morning. The price of Oil has fallen out of bed, and trades this morning with a $70 handle…
I think the Oil traders are the only asset class traders that see what’s going on in the World, right now with debt up to each country’s ears, inflation rising, and being sticky, and the rot that’s on the vine of each country’s economy, and know that demand for Oil is going to wane in the coming months, and so , they have seen to it that their fears, are expressed in the price of Oil.
I forgot to mention something else that good friend, Dennis Miller and I talked about the other day, and that is the new program that the Fed Heads introduced that will provide funding to banks in trouble… Here’s some more from Bill Bonner’s letter: “The facility will allow banks to take advances from the Fed for up to a year by pledging Treasuries, mortgage-backed bonds and other debt as collateral. By allowing banks to pledge their bonds, they can meet customer withdrawals without having to sell their bonds at a loss, which is what Silicon Valley Bank did last week, sparking a run on the bank.…the Fed won’t look to the market value of the collateral, which in many cases reflect big unrealized losses due to the jump in interest rates.”
Chuck again… So, isn’t that just another form of QE? Buying bonds to help a bank keep its head above water, no matter what condition the bonds are in? To me this is just another lame brained idea from the PHD’s at the Fed/ Cabal/ Cartel… Screw the people, they are not worthy! Only the select few among the crowds in the bank that have more than $250,000 on deposit are worthy!
I had better stop there before I go and say something that gets me shut down! I could be labeled a “domestic terrorist”… Now getting a moniker like that would certainly increase my readership now wouldn’t it! HA!
The banking news from Europe isn’t any rosier than here folks… Yesterday, trading was halted on several banks because of selling pressure. Credit Suisse shares slid 24% after Saudi backer rules out further assistance, and other banks are reeling from the news from Credit Suisse… You know, the ruling class thinks the rest of us are all walking, talking idiots, dolts, twits, and any other word that describes how they fell about us… They can’t believe that the walking talking dolts, have seen the banks for what they are and are pulling money out of them…
And this has been a major piece of the problems for banks… The Banks were flush with cash that was deposited, thru profits from Companies, and stimmy checks from the walking talking dolts… They had to put the money to work, to make an interest rate spread… Since they weren’t paying much in interest, they’re goals of making an interest rate spread , weren’t that difficult… They looked at the Treasury yield curve, and bought bonds…
Now what have I been warning you all about for over a year now? That buying bonds was a bad idea, as long as the Fed Heads had their interest rate hike hats on… That buying bonds with a low yield, was not a good idea, if the next bond that’s issued has a higher yield, and the next bond has an even higher yield, etc… I’ve explained that one should wait until the Fed Heads indicate that they are nearing an end of their rate hike adventure, and THAT would be the time to buy bonds…
Apparently bank CFO’s don’t’ read the Pfennig… Because they did the exact opposite, and bought zero and 1% yielding bonds, that had unrealized losses on the books, that didn’t have to be taken, until… The Banks had to sell the bonds to shore up their capital… Uh-Oh! Well, you can’t say that I didn’t warn them, just because they didn’t think it would be worth their precious time to read the Pfennig, doesn’t remove the fact that I warned them!
So… the crybabies are calling for the Fed Heads to pivot and cut rates at the next meeting that will take place on March 21-22… One of those two day meetings where all the board games get brought out for the Fed Heads to play while they wait for their time to announce another rate hike! You know, in the beginning of the rate hike adventure, I really didn’t think that Chairman, Powell, had the intestinal fortitude to carry out the mission of defeating inflation that they themselves had created… But, so far, Powell, has carried out his mission like a real trooper… And so, to me, now is NOT the time to pivot, for the Fed Funds rate is still below the inflation rate! You can’t defeat inflation like that! Rates have to go much higher…
Remember when I told you that we were in a position that the lawmakers, and Treasury, and Fed Heads had backed us into… And that position is to either throw out all the work in fighting inflation (rate hikes), and allow inflation to rise and take over the economy thus brining it to its knees… Or… we can decide to fight inflation with much higher interest rates and bring the economy to its knees that way… As Bill Bonner has said for some time now… Inflate or Die…
My position on this is that we need to defeat inflation, and worry about the other stuff later, we need to get households back on terra firma, and if that causes a long recession, then so be it… We, as a country, have lived through long recessions before, and even though the Fed Heads have prevented a recession for years now, we’ve lost sight of how to do this… But, we will need to hunker down, spend wisely, and not cause any commotion… The excesses of the previous boom, will be cleaned up, and we’ll start over again, stronger, because inflation isn’t hanging over us like the Sword of Damocles…
Ok, I’ll step down from my soapbox now… I always seem to tick off some readers when I decide to opine on the soap box… But, somebody has to do it, and it might as well be me!
Before I head to the Big Finish today, I wanted to mention that the corporate layoffs had been quiet lately, until this was announced yesterday: Meta Platforms CEO Mark Zuckerberg wrote in a blog post on Tuesday that the company will “reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired.”
And the economy is so strong, that not only are employees of this company are being axed, but also that the open positions have been erased… deleted…
The U.S. Data Cupboard yesterday had the aforementioned stupid CPI… Today’s Data Cupboard has the Feb Retail Sales for us… The Butler Household Index (BHI) indicates that this report will be very disappointing… Consumers are really feeling the pinch of their what is left for disposable income… And this report should show that, but then who knows? The Gov’t bean counters could decide to manipulate this report too… UGH! We’ll also see Feb PPI (wholesale inflation)… This is a preview of what we will see in consumer inflation in the coming months… Remember, I keep telling you that inflation is sticky…
To recap… Yesterday looked like a normal day of profit taking after two days (Friday & Monday) of huge gains in Gold & Silver, and shorting the dollar… The BBDXY lost 3 more index points on the day, thus signaling that the major selling of the dollar was over… And that was proved to be correct in the overnight markets where the BBDXY gained 8 index points! Today is the Ides of March… the day that was forecast to be the day that the digital currency was announced… I don’t think that will happen today, so go on, move along for these are not the digital currencies we’re looking for… HA!
For What It’s Worth… well talk about saying oops! That’s what this article is about… The Good folks at GATA sent me this note, and it’s about how the two failed banks last week had just gone through examinations and got a bill of good health, this is a Wall Street Journal article, so you have to have a subscription to read it.. but fear not… I have the particulars in a snippet for you… but it can be found here: KPMG Gave SVB, Signature Bank Clean Bill of Health Weeks Before Collapse – WSJ
Or, here’s your snippet; “Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit.
What KPMG knew about the two banks’ financial situation and what it missed will likely be the subject of regulatory scrutiny and lawsuits.
KPMG signed the audit report for Silicon Valley Bank’s parent on Feb. 24.
Regulators seized the bank on March 10 after a surge of withdrawals threatened to leave it short of cash.
“Common sense tells you that an auditor issuing a clean report, a clean bill of health, on the 16th-largest bank in the United States that within two weeks fails without any warning, is trouble for the auditor,” said Lynn Turner, who was chief accountant of the Securities and Exchange Commission from 1998 to 2001.
Two crucial facts for determining whether KPMG missed the banks’ problems are when the bank runs began in earnest and when the bank’s management and KPMG’s auditors became aware of the crisis.”
Chuck Again… that reminded me of something I once said to a group of bankers at a meeting… That I would be the best bank examiner there ever was, because I know where the bones are buried… And apparently these auditors didn’t!
Market Prices 3/15/2023: American Style: A$ .6640, kiwi .6200, C$ .7275, euro 1.0626, sterling 1.2086, Swiss $1.0845, European Style: rand 18.3792, krone 10.6880, SEK 10.5637, forint 372.03, zloty 4.4316, koruna 22.5119, RUB 75.91, yen 133.56, sing 1.3459, HKD 7.8478, INR 82.60, China 6.9950, peso 18.86, BRL 5.2538, BBDXY 1,251.56, Dollar Index 104.41, Oil $70.45, 10-year 3.54%, Silver $21.83, Platinum $970.00, Palladium $1,449.00, Copper $3.93, and Gold… $1,907.16
That’s it for today… Whew! I did a quick look at my bank account this morning, and found that it hadn’t been converted to digits… I still think that when the announcement is made for digital currency, that will be done on a weekend, and we’ll start Monday with digits… Well, have you completed your NCAA Tournament Bracket? I filed mine… I always used to say, “here’s my $20 annual contribution”… Usually by the time the Sweet Sixteen are left, I have torn my bracket up and thrown it away! UGH! I’m all by myself again… Hello, Pizza Man Pizza? HA! My darling granddaughter, Delaney Grace, will be here for the St. Pat’s Day celebration here at the Condo… Can you believe that little d, will turn 16 this August? Where did those 16 years go? Oh well… se la vie… Jay & The Techniques take us to the finish line today with a song that we used to play in my first band: Apples, Peaches, Pumpkin Pie… What? Don’t know that one? YOUTUBE it, I think you’ll like the song… I hope you have a Wonderful Wednesday today, and will continue to Be Good To Yourself!
Chuck Butler