The Threat Of A Rail Strike Is Back!

Rocktober 20, 2022

* currencies & metals get bought in the overnight markets last night

* Chuck tells overnight traders to “pick a lane”… 

Good Day… And a Tub Thumpin’ Thursday to one and all! I was watching the Padres/ Phillies game yesterday, and for the first few innings it appeared that the Phillies would leave San Diego with a 2-0 lead in the series… I thought to myself…  Remember a month ago at the local watering hole, when I was asked which team I wanted to see the Cardinals play in the playoffs, and I responded, “I really don’t care as long as it’s not the Phillies, they scare me”… Now you would think that someone that convicted toward a team would go place a bet on them, right? Well, not me, I’m too thick headed to gamble, or even know how to do it! Any way, the Padres rallied and evened the series 1-1… The great Leon Russell greets me this morning with his song: Back To The Island…  I really like this song, BTW…

Well, the overnight buying into Wednesday morning was, as I reported yesterday, all dollar centered, with some heavy dollar buying going on. And I was holding my breath as to what would take place once the U.S. traders saw the overnight results, thinking that it would be an absolute ugly day… Well…there was good news and bad news yesterday… First the good news… During the U.S. Session yesterday, the dollar drifted, and actually lost 1 index point of the 7 it had gained overnight… Gold which was down $20 in the early trading didn’t lose any more major ground… The bad news is that Gold ended the day down $22.50 to close at $1,630.90, and Silver which was down 41-cents early ended the day down 28-cents to close at $18.56…  So, it was still an ugly day, just not as ugly as I feared it would be given the dollar buying overnight…

The price of Oil rallied and ended the day trading with a $85 handle, while the 10-year Treasury yield gained more ground yesterday, and ended the day with a 4.14% Yield… So… do you think the bond boys are finally giving up the ghost on their Fed Head Pivot call?  It sure appears that way to me… But recall a month or so ago, when the 10-year’s yield was 4.% the bond saw a HUGE amount of buying to bring the yield down to 3.79%, and it’s been a struggle ever since to regain that 4% yield… 

In The overnight markets last night… The dollar got sold… Not by a whole lot, but the BDDXY has lost 3 index points overnight and trades this morning at 1,344… Gold is up $6 in the early trading today, and Silver has added 16-cents… The price of Oil has bumped higher to trade with a $87 handle this morning, while bonds were steady overnight.  These overnight traders need to stick to their lane… I mean it’s either buy dollars or sell dollars, but not flip flop like a fish out of water on the shore…  Sure, facts change, but not like the side of the trade these guys are choosing each night… Oh, well, what else can be changed to the react opposite of what has been the normal reaction? We see it all the time in the Data Cupboard, bad data gets a positive response in the markets, and vice-versa…  This stuff drives a fundamentalist like me, stark driving mad!

Things have been pretty quiet down under these days… Ever since the Reserve Bank of Australia hiked rates 25 Basis Point to bring their Official Cash Rate to 2.60%, and that followed the Reserve Bank of New Zealand (RBNZ) and their rate hike which was larger and brought their OCR to 3.5%… Both banks gave hints at their respective meetings that more rate hikes would be in store…  But I look at New Zealand, and their rate structure, and wonder why kiwi is struggling these days… It’s not just about interest rates, or at least it shouldn’t be, but.. .That’s what it’s all about in the U.S.  The U.S. can be officially in a recession, while hiking rates, which has never been tried before, and have debt up to their eyeballs, but the dollar is strong, because of the higher interest rate than its major competitors for deposits, Japan, China, Eurozone, and U.K…. But not higher than kiwi… So, go figure that one…

The European Central Bank (ECB) will meet next week (10/27) and I fully expect them to hike rates once again, as I’ve heard nothing but comments from the ECB members about how they will do everything they need to do to bring inflation back to their target of 2% I would have to say that the ECB suffers from what I used to suffer when I was at EverBank… No marketing!  They should have the Presient (La Garde) and anyone else in charge out talking up interest rates to support the euro… I’m just saying…

I talked a bit about the Swiss franc yesterday, and then this article about the Swiss National Bank (SNB) came across my desk from the good folks at GATA… Seems the SNB is looking for dollars, and not just the normal dollar swap stuff they get from the Fed Heads… The article talks about how the SNB is simply looking to make a profit on the dollar trade… Now that seems to be something that a Central Bank should not be taking part of, right?

Well, have you heard the news that the railroad strike is back on? The tentative agreement was rejected by the union members, here’s CNN with a snippet on this:” A union of railroad track maintenance workers has rejected a tentative agreement with the nation’s freight carriers, renewing the threat that there could be a strike that shuts down this vital link in the nation’s already struggling supply chain.”

Uh-Oh! And just in time for the Christmas shopping season! Oh, and that other little thing called the mid-erm elections…  This doesn’t bode well for the economy folks…

The folks at www.wallstreetonparade.com, Russ and Pam Martens were at it again last week, when they reported a very ironic story regarding Credit Suisse…  Let’s listen in on a snippet: “On September 28, Risk.net named Credit Suisse the “Credit Derivatives House of the Year.” Three businesses days later, Credit Suisse saw its own Credit Default Swaps blow out to more than 300 basis points and some of its own bonds trade at 63 cents on the dollar. Simultaneously, its shares traded at an intraday low of $3.70 in New York on October 3, closing at $4.01, and putting it in crisis management mode.

On the same day that its stock, bonds and Credit Default Swaps were exhibiting severe stress, Reuters decided to run an article in the early afternoon reminiscing on the serial scandals that have plagued the global bank: words like “cocaine,” “kickbacks,” “fraud,” and “spying,” reminded investment managers of just how voluminous and varied Credit Suisse’s scandals had been of late.”

Chuck again…now that would be funny if it weren’t so serious…I’m still laughing out loud at this development… Hey! Maybe the same folks that thought it wise to give Ben Bernanke a Nobel Prize for boneheaded economics, were the folks that named Credit Suisse “Credit Derivatives House of the Year” , yeah, that’s it that’s the ticket!

I couldn’t make that stuff up if I wanted to!  We used to have a thing on the trading desk, when Chris Gaffney would come in with the Riverfront Times, and read us the article titled: News of the Weird…  Good memories there…

OK… I had a dear reader send me a note yesterday, offering his thought on why the major currencies (sans yen) are trading around $1.00…  He thinks that it’s a way for the Gov’ts to covert their currencies to digital currencies easily…   I told him I thought he was onto something there, as my Spider Sense was tingling… Just a thought…

Deep thoughts by Jack Handy… Or, Chuck Butler in his place… You don’t suppose that the dark side is making plans to have one Global economy, one Global currency, and on Global leadership do you? Now that’s a conspiracy thought that is out there!   Just thought I would share with you some things that I think about from time to time…

The U.S. Data Cupboard today, has the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims. Along with that print, we’ll also see the leading Indicators, which for the last two months have been negative… And then finally, another regional PMI, this time from the Philly region… I wonder if it will show the same rot on the vine that the Empire region showed last week?

To recap… The dollar got bought by the bushelful in the overnight markets to Wednesday morning, where the U.S. traders picked it up, and failed to generate an follow-up… The dollar still had a strong showing for the day, and Gold ended up losing $22.50 on the day… Chuck talks about the A$ and kiwi this morning, and the ECB, and a lot of other stuff!

For What It’s Worth… here we go again with derivatives being compared to weapons of mass destruction, and Warren Buffett called them… These are bad things for any market/ economy, especially when things go opposite of how the derivative says they will go… This article is from WSOP, and it can be found here: www.wallstreetonparade.com

Or, here’s your snippet:” Today, we will be asking the Senate Banking Committee, its Chair, Senator Sherrod Brown, and one of its most knowledgeable members, Senator Elizabeth Warren, to call an emergency hearing and subpoena the testimony of two brilliant researchers for the Office of Financial Research. Those researchers are Andrew Ellul and Dasol Kim.

The men have done nothing wrong. In fact, they have done something courageous. They have effectively blown the whistle on how global Wall Street banks have, once again, endangered the stability of the U.S. financial system through their opaque and dangerous use of over-the-counter derivatives.

Unfortunately, because of the legions of lobbyists employed by Wall Street that shape and corrupt the rules of federal bank regulators, these men are prevented from revealing the names of the most dangerous banks and their most dangerous counterparties because that information is considered restricted information obtained through supervisory inspections. (We have not spoken to these researchers directly. We make the assumption that they have not released the names of the banks and their most dangerous counterparties because it is considered “supervisory” information since that is the same excuse that we have received repeatedly when we file Freedom of Information Act requests with federal banking regulators.)

We believe that the Senate Banking Committee can, and should, compel their testimony and the naming of names under subpoena because the secrets they are being forced to keep present a clear and present danger to the financial stability of the United States and thus a clear and present danger to the national security of the United States.

Andrew Ellul is Professor of Finance and Fred T. Greene Chair in Finance at Indiana University’s Kelley School of Business. He holds a Ph.D. from the London School of Economics and Political Science.”

Chuck again… I thank Ed Steer at www.edsteergoldsilver.com for highlighting this article this morning, and I’ve said it before, if it’s got the Ed Steer stamp of approval, then it’s good enough for me!

Markets pricing 10/20/2022: American Style: A$ .6309, kiwi .5704, C$ .7287, euro .9812, sterling 1.1233, rand 18.2469, krone 10.5859, SEK 11.1878, forint 419.40, zloty 4.1940, koruna 25.0013, RUB 61.44,

JPY 149.48, sing 1.4228, HKD 7.8490, INR 82.75, China 7.2222, peso 20.07, BRL 5.2716, BBDXY 1,344.37, Dollar Index 112.52, Oil $87.50, 10-year 4.14%, Silver $18.72, Platinum $894.00, Palladium $2,017.00, Copper $3.42, and Gold… $1,636.33

That’s it for today and this week… The week went fast for me, and I’m sitting here trying to wonder why especially since I haven’t left the house so far this week, due to the cold weather… Good news, the weather is supposed to warm up this weekend, so I’m all over that! You know, whenever I see someone and they say, “it’s good to see you”, I respond “it’s good to be seen”!  And they always give me a second look and then chuckle…  But I mean it! I could be 6 feet in the ground, and wouldn’t be seen any longer! We are already stocked with Halloween Candy! Usually, we buy it early, and then have to go back out and buy more to give out to the Trick or Treaters… But not any longer, not since I gave up sweets… It’s been two years now, two years of checking my blood counts, two years of passing up cakes, cookies, muffins, and all the other things I used to eat for breakfast with coffee each day!  I’m not complaining… It’s just that I never thought this would go on this long… But it has… Grover Washington, Jr. takes us to the finish line today with his jazzy song: Just The Two Of Us, “building castles in the sky, just the two us, you and I” Yeah, that song… I hope you have a Tub Thumpin’ Thursday today, a Fantastico Friday tomorrow, and will remember to Be Good To Yourself!

Chuck Butler