The Markets React As If The FOMC Minutes Were News!

January 6, 2022

* Currencies & metals get sold on Wednesday

* No reserve requirements for banks? That should work out just dandy… NOT! 

Good Day… And a Tub Thumpin’ Thursday to one and all!  The Blues played on TNT last night, which meant that I got to watch them play the Penguins… The Blues held the lead in the game for 2 periods, and then….   the roof collapsed on them, and they gave up 4 goals in the 3rd period to lose the game… UGH!  Boys, the game is 3 periods, in case you’ve forgotten. OK… My St. Louis U. Billikens had their basketball game postponed VS LaSalle and now look to hopefully get to play their next game on the schedule. I saw the sun out yesterday, midday, and got my stuff together to go down and sit in it and read, and by the time I got down there, the clouds had moved in… I still sat out on the deck to read my book, but with no sun, it wasn’t doing me any good… Other than breathing salt air! HA! The Moody Blues greet me this morning with a song from their Seventh Sojourn album, which is one of my all time fave albums, the song is: When You’re A Free Man… 

Well, when I left you yesterday morning, the dollar was getting sold, and Gold was up a buck or two in the early trading… About mid-morning, the ADP Employment Report and blew the expectations of 375,000 job created in Decmber, out of the water, printing 807,000 jobs created in December…  OKI, now have the government’s cooks and massagers finally gotten to the folks at ADP? I mean, doesn’t that number just look preposterous?  I mean just last week it was reported that the Job Quits in November were 4.5 Million, and in Rocktober they were 4.2 Million?  So, suddenly, out of thin air, everyone decided to go back to work in December?  Come one, I was born, just not yesterday!

So, suddenly yesterday, the dollar selling stopped, and became dollar buying, and then the powers that be went to work on Gold, and the whole day turned ugly, for the currencies and metals that is… Not so ugly for any one of the 807,000 people that got a new job in December!

The BBDXY which began the day at 1,177, closed the day at 1,179… And Gold which started the day up a buck or two, ended the day down $3.90, to close at $1,811.50, and Silver lost one shiny quarter on the day to close at $22.88…  The Price of Oil kept its head above the $77 handle, but lost some ground on the day, and then the 10-year Treasury’s yield rose to 1.69%, and some pundits thought that the 4 BPS rise in yield was responsible for the dollar turn around…

But when you get down to the cheese that binds…. The ADP Employment Report, and then later in the day the FOMC Meeting Minutes, probably were more responsible for the dollar turnaround on the day. I don’t get why the markets acted so surprised by the meeting minutes, which basically told us what we already knew… that the Fed/ Cabal/ Cartel has finally recognized inflation as a problem and will speed up their tapering in an effort to get to hike rates sooner than expected this year…  Nothing new here, but the markets reacted as if it was the first time they had heard these words… 

The Good Folks at GATA sent me a note yesterday, quoting Brien Lundin, of the New Orleans Investment Conference fame, so I thought I would share with you his thoughts on the FOMC Meeting Minutes: “Amazingly, the minutes showed that Federal Reserve officials and economists had apparently just discovered the rampant price inflation that everyone else had been talking about for months.”

Chuck again, yes, Brien believes, like I too believe,  that now that the Fed is actually acknowledging inflation, that Gold will get on its horse and ride to higher ground…  But there’s always those pesky, do no good, evil minded price manipulators hanging around…

In the overnight markets last night…. the dollar buying continued overseas last night, and the BBDXY rose to 1,180 to start today. Gold is getting sold in the early trading to the tune of $11.20, and Silver is getting sold too, as it is down 52-cents this morning…  The price manipulators just keep pushing these metals prices downward, until they reach a price that’s predetermined when they started the attack… Once achieved, the prices of the metals will rebound once again…  

The price of Oil has gotten back on its horse in trades with a $78 handle this morning… And the 10-year’s yield rose another 4 BPS overnight to trade with a 1.73% yield this morning.  This would be a good time to remind you that I said months ago that by the time I’m sitting in my seat at Roger Dean Stadium watching my beloved Cardinals play spring training games, the 10-year’s yield will be 2.00%…  

Still the 10-year’s yield will be very negative in real interest terms, but at least it will look presentable when meeting the dad, at 2.00%… 

In 2012 or 13, I wrote a Sunday Pfennig, and it was titled: Chuck’s Debt Solutions…  You see I had been challenged by management to stop complaining about rising debt, and come up with a solution to reducing the debt. So, I not only wrote about one solution, I wrote about 10 of them! That’ll show ‘em I said to myself!  But my debt solutions fell on deaf ears and not only did we, as a country keep adding to debt, we doubled up on it!

One of those solutions were to quit spending money on things we didn’t have money to spend… That would mean to quit all wars… The war on poverty, the war on drugs, the war in the Middle East, the war on terror, and all other wars… In 2020, we added another war to our list of things we didn’t have the money to spend on, the War on Covid…

We have failed miserably at trying to win these wars… We’ve thrown more money at them than you can shake a stick at, and in the end we as a country are deeper and deeper in debt, and there’s nothing that will stop it from continuing to grow now… I wonder how much better our financial statement as a country, would look today, if we had stopped all that deficit spending, 10 or so years ago…

Oh, I had a plan for retirees, I had a plan for after ending the wars, bringing back the soldiers and putting them on our borders, to better protect our country from outsiders… And stuff like that, if more people had read that Pfennig, I might have received a NOBEL!   Yeah, right, as if!

OK, back to current times… This trip back in time was brought to you by the Good Folks at The Daily Pfennig!

OK… Under the double heading of : We’re still turning Japanese, yes, I really think so… and Now Tell me how this ends up good?

As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020.  This action eliminated reserve requirements for all depository institutions.

So, let’s break this announcement down… Basically it now means that banks can lend out 100% of deposits they take in… I shake my head in disgust… I worked for many years in a bank a few them for that matter, and I completely understand how removing reserve requirements ease life for a bank…. And then you take in the fact that 5 of the largest banks in this country were receiving daily injections of cash in the repo markets from the Fed/ Cabal/ Cartel… And doesn’t that just make your skin crawl?

And the first point of us turning Japanese, yes, I really think so… is just follow up to what I’ve been writing about for over a decade now, and that’s how the U.S. seems to following Japan’s financial moves to a T…  Oh, and Japan removed their reserve requirements a year or so ago…

Put that announcement in your journal or notebook or whatever you keep reminders in, and come back to it when all hell breaks loose in this country…  You will then, say, “That Chuck Butler sure was right about this”…

The U.S. Data Cupboard ADP Employment Report was already talked about above, and there was nothing else to see that made a difference… Today’s Data Cupboard has the usual Tub Thumpin’ Thursday fare today, the Weekly Initial Jobless Claims. In addition we’ll also see November Factory Orders… But that’s so stale data that it’s beginning to smell!  So, don’t count on that to be a market mover.

To recap… The currency & Metals rally that was taking place yesterday when the Pfennig was sent out, were turned around on some very suspicious ADP data, and then the FOMC Meeting Minutes confirmed that the Fed/ Cabal/ Cartel FINALLY sees the inflation that we’ve all been screaming our heads off about, and stated that the Fed/ Cabal/ Cartel heads were ready to hike rates sooner than earlier stated…  Now, I do realize that markets look forward… And they liked that Central Bank was talking about hiking rates, but….  If they saw that then they certainly had to see why the Central Bank is talking about hiking rates….  The stock jockeys saw it… I’m just saying…

For What It’s Worth…. Ok, this article came to me via the good folks at GATA, and it’s an article about how 2022 should be a good year for Gold and Silver…  And it can be found here: https://www.sprottmoney.com/blog/A-New-Year-For-Comex-Gold-Craig-Hemke-January-04-2022 

Or, here’s your snippet: “

After a disappointing 2021, the new year for precious metals likely holds a return to the bull market gains seen in 2019 and 2020.

So welcome to 2022. Yes, 2021 was a lousy year for both COMEX gold and COMEX silver. Both posted negative returns, with COMEX silver falling nearly 12%; however, and as you can see below in this chart provided by Ronni Stoeferle, a negative year during a bull market for the COMEX gold price is not unusual. What is unusual is two negative years in a row. Check the periods 2007-2012 and 2016-present.”

Chuck again, yes it’s a short snippet today, because most of the article has graphs and charts that he refers to… so, to get you to go to the link above and read the whole article, I have left the charts out…  Tricky, I know, but I’m very tired this morning, so you get what you pay for! HA! 

Market Prices 1/6/2022: American Style: A$ .7186,  kiwi .6758,  C$ .7828, euro 1.1307, sterling 1.3537, Swiss $1.0889, European Style: rand 15.7541, krone 8.8819, SEK 9.1357,  forint 318.60,  zloty 4.0357,  koruna 21.7017, RUB 74.95, yen 115.81, sing 1.3602, HKD 7.8019, INR 74.41, China 6.3539, peso 20.55, BRL 5.6797,  BBDXY 1,180.38, Dollar Index 96.18,  Oil $78.88, 10-year 1.73%, Silver $22.36, Platinum $984.00, Pallladim $1,964.00, Copper $4.36, and Gold… $1,800.30

That’s it for today… And this week of course…  What an awful 3rd period for the Blues last night… It was like night and day, the first two periods VS the 3rd period… Still no word on the baseball negotiations… I watched a special on MLB TV the night before that was a documentation of the 80’s Cardinals… AKA Whitey Ball… They focused on the 1982 team, and how in Game 6, the game was delayed by a two -hour rain… I said to Kathy, I was at that game with Art Kniffen… Art and I were good friends that worked together at Mark Twain Bank… He went on to run his own bank, and has since retired, I think that’s what I heard. Art and I used to have a contest on who could make the strongest coffee… Hope All’s Well, Art….   My pen pal, Billy Squier takes us to the finish line today with his song: In The Dark….   I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself… And don’t forget: Be Positive, Test Negative!

Chuck Butler