May 2, 2023
* currencies and metals get sold on Monday…
* Ron Paul drops by the Pfennig this morning…
Good Day… And a Tom Terrific Tuesday to you! A Chilly day here in the Midwest yesterday… I was talking with good friend, Frank Trotter last week, and I described the weather that was forecast for that night’s soccer game… I told him, (who spends winters in Colorado) “to you it’s not cold”, but to me( who spends winters in Florida) it is cold!” This has been a normal spring if you ask me… Some warm days, but once the sun goes down, it gets quite chilly… Some years we go right from cold to June 90 degree days in May… I got me a new Blackstone griddle last week! And I made steak fajitas on it! Now those were tasty! Oldest son, Andrew, helped me put it together, and drag it around to the backyard, so thanks Andrew! The Cure greets me this morning with their great song: Close to me… I used to work with Laura Mayhew, who loved to hear my play the Cure on the trade desk, back in the day…
Well, after all that talk I went through yesterday about how the sentitment toward the dollar was changing, due to the idea that the Fed Heads’ rate hike are nearing an end, didn’t help the currencies or metals yesterday… The dollar got bought and the BBDXY gained 5 index points on the day… The euro fell back below 1.10, and the Japanese yen saw more selling. Gold lost $8.10 yesterday to close at $1,983.50, and Silver, which was up in the early trading yesterday, ended up losing 9-cents to end the day at $25.06…
It’s nice to see that there are more traders, hedge funds, etc. out there that are thinking like I am… I pulled this from Bloomberg.com: “Investors are piling into bets against the US dollar as this week’s expected Federal Reserve interest-rate hike is likely to bring the steepest tightening cycle in a generation to a halt.
Hedge funds and other large speculators boosted their net bearish position on the greenback against major peers to more than 70,000 contracts as of April 25, the most since June 2021, data from the Commodity Futures Trading Commission show. The currency is set to erase all of the gains posted since the Fed started raising the cash rate last March, according to Bloomberg’s gauge of the dollar against major trading partners.”
Chuck again… So, when will all these shorts begin to weigh on the dollar? Soon… I’m of mind to say…
In the overnight markets last night… There wasn’t much movement in the dollar, the BBDXY did lose 2 index points, but the euro is still trading below 1.10, and the Japanese yen is trading with a 137 handle this morning, so I’m not seeing what currencies have gained overnight… There were a couple of smaller currencies that did see some gains overnight, they include: rubles, Aussie dollars, and kiwi… I think that traders are sitting on their collective hands right now, waiting to hear what the el jefe at the FOMC says after they hike rates tomorrow afternoon… The price of Oil is steady with a $75 handle, and the 10-year’s yield continues to get whipsawed and trades this morning with a 3.52% yield…
I have to take issue with all those folks that keep blaming the Banking Crisis on the Fed’s rate hikes… What? Did they want the Fed/ Cabal/ Cartel to just keep rates low and allow runaway inflation? Yes, for those banks that bought zero rate Treasuries, they have problems, but that’s their management’s problem, not the Fed’s… The Fed/ Cabal/ Cartel has a mandate and that is to protect price stability… And under that price stability umbrella is inflation, and to keep it at bay… So, quit your whining!
Gold is up in the early trading this morning $6, and Silver is getting whacked, down 30-cents to start the day… The Silver short paper trades must be in play this morning… And that just makes me sick to my stomach… or maybe that’s my chemo? Either way, it’s not fun!
I read a piece this morning, that there are now 10 more banks out there that have problems… Of course I would have to sign up for the subscription to the letter and pay through the nose, to get the actual bank names… So, we don’t know which ones they are, but we do know that the Banking Crisis is far from being over! But isn’t that just what these younger people all do now… Blame someone else for something? So… let’s blame the ISM that’s still below 50! What a bunch of dolts!
So, have I got a treat for you today in the FWIW section… Ron Paul drops in to tell us that all the talk about a debt ceiling agreement, and budget agreement is theatrical at best… You’ve gotta love some Ron Paul to start your day!
Did you hear about the IMF’s forecast for global growth in 2023? It was only 2.8%, and if you ask me, I think they overstated the growth number! Countries all over the globe should be shaking in their respective boots, because this is the worst/ slowest forecast by the IMF in 50 years! But you know what? I’m sure not one Congress person even know about the IMF’s forecast, and if they do know, they think, “hey, 2.8% isn’t bad”… They have’t a clued that it’s the worst/ slowest forecast by the IMF in 50 years! That is unless they read the Pfennig! HA! AS If!
Longtime friend, Addison Wiggin is coming out with an update version of his book: Demise of the Dollar. The first Demise of the Dollar, was written in 2005, and the second revision was written in 2008, and yours truly, yes me, wrote the foreword for the 2008 book! You can order the new book online so don’t wait, be the first one on your block! And this time, Addison got a Big Name to write the foreword, James Rickards!
I have a treat for you, or at least I think it is… This is a snippet of my foreword in the 2nd revision of the book: The Demise of the Dollar, remember this was written in 2007: “Today, the U.S. Current Account Deficit requires $3 Billion a day in foreign financing. How long can we continue to depend on the kindness of strangers? And that should bring you to the conclusion that the Demise of the Dollar is more of a reality in 2007, than ever before?”
So, yesterday I said that the European Central Bank didn’t meet again until 5/24, but that was incorrect… You would think that if you went to the ECB’s website, and looked at their schedule of meetings there would be no chance of an error… The ECB meets again on 5/11, next Thursday… And with inflation showing that it is resilient in the Eurozone, I expect another rate hike from the ECB…
The U.S. Data Cupboard yesterday had the ISM Manufacturing Index, and for the 6th consecutive month, it printed in contraction. In other words, below 50… In March it was 47.1, which was better than Feb’s 46, but it’s still below 50, and I would bet a shiny quarter that April’s print will be worse once again… I’m just saying… I read online that one writer said that Gold & Silver got sold because the ISM was better than expected… Hmmm… That sounds really fishy to me…
Today’s Data Cupboard has the March Factory Orders. You may recall that Feb’s Factory Orders were negative… So, I expect March’s Orders to at least be positive… But as with the ISM, I truly expect this data to return to very disappointing next month…
To recap… The dollar got bought yesterday, despite what Chuck told you about how Traders and Hedge Fund mgrs. were shorting the dollar… Bloomberg. com had an article about this confirming what Chuck had told you yesterday… Gold got sold yesterday, along with Silver, and while I’m sure there were some short paper trades submitted to the COMEX, this looked more like normal trading… The IMF has issued its slowest GDP growth forecast for the Globe in 50 years! And look! Chuck is the only person talking about that!
Before we head to the Big Finish today, I wanted to take a moment to remember Mike Shannon… Mike Shannon was a St. Louis kid that became a key member of two World Series teams and 3 Pennant teams before a kidney problem made him retire, and he went right to the broadcast booth, where he stayed calling games on the great KMOX for 50 years! Every year, I knew it was spring when I heard Mike’s voice on the radio! Mike Shannon was a great high shcool athlete, as he was named Mr. Missouri in both football and basketball, and was signed to play quarterback at the University of Missouri, but the the Cardinals dangled a paying contract in front of his and he played the love of his life, baseball instead… Everybody in St. Louis knows a Shannonism, where he messes up the english language, but that was part of him… We all loved him, and will miss him, as he died last week at age 83…
For What It’s Worth… there was a little press on the House’s submittance of a budget deal last week… This has a snowball’s chance of surviving in hell… But it was worth a try, eh? Spending cuts, etc. So… as you would surmise, Ron Paul had something to say about this, and his weekly letter can be found here: ‘Congress Ignores Real Debt Ceiling Drama’ – Ron Paul’s 1 May Column (mailchi.mp)
Or, here’s your snippet: ” Last week the House passed legislation increasing the debt ceiling. The bill was supported by all but four Republicans. For some Republicans, this was the first time they had ever voted for a debt ceiling increase. Perhaps the reason they did so this time was because the legislation also promised to reduce federal spending by $4.5 trillion over the next decade. Most of those spending reductions are achieved by rolling back Fiscal Year spending to 2022 levels and then limiting increases in spending to one percent for the next ten years. The bill also returns unspent COVID relief money to the US Treasury and eliminates President Biden’s student loan forgiveness programs.
Perhaps the most significant part of the bill is the REINS Act. This legislation requires congressional approval of any new federal regulation that will have an impact of more than $100 million, will have significant harmful impact on the economy, or will increase consumer prices. Even though the bill increases spending and debt, there are reasons a supporter of limited government might vote for it.
However even in the unlikely event that this bill is passed in the Senate and signed into law by President Biden, it is unlikely that the one percent spending cap would remain in force for the full ten years. Historically, spending caps imposed as part of a balanced budget or debt ceiling deal do not last for more than one or two Congressional terms. This is because every spending program is “protected” by members of Congress whose constituents and/or donors benefit from the program. This process already occurred with this bill before it was even voted on, as Speaker McCarthy had to remove provisions limiting ethanol subsidies to appease several farm state Republicans.
Surely lobbyists for the military industrial complex are already plotting to use hysteria over China, Putin, Iran, or one of the US’s many other designed enemies to justify greater than one percent increase in military spending.
The only reason the US government is able to run up such huge deficits without experiencing a complete economic meltdown is the dollar’s world reserve currency status. But the growing de-dollarization movement-fueled by the US government’s fiscal recklessness and hyper-interventionist foreign policy should be a wake-up call to Congress.
Sadly, few in DC seem to be paying attention.
The government’s fiscal situation will soon worsen, as both the Social Security and Medicare trust funds will likely be bankrupt within the next decade, forcing Congress to find an additional $116 trillion to fully fund them.”
Chuck again… I’ve told you before that I think Ron Paul was the last of a breed of conservative legislatures… The Conservatives are spend thrifts just like the liberals… It’s a sad day, when as Ron says, “few in DC seem to be paying attention to the de-dollarization going on”…
Market Prices 5/2/2023: American Style: A$ .6697, kiwi .6205, C$ .7367, euro 1.0971, sterling 1.2470, Swiss $1.1147, European Style: rand 18.3662, krone 10.7065, SEK 10.2839, forint 338.82, zloty 4.1741, koruna 21.4937, RUB 79.82, yen 137.28, sing 1.3341, HKD 7.8500, INR 81.88, China 6.9184, peso 17.93, BRL 4.9878, BBDXY 1,229.81, Dollar Index 102.12, Oil $75.46, 10-year 3.52%, Silver $24.76Platinum $1,052, Palladium $1,455.00, Copper $3.87, and Gold… $1,989.74
That’s it for today… No Cardinals game last night, so at least they didn’t lose again! But then maybe they did… As a coach told us once, “You’re so bad, you couldn’t beat bye”… OUCH! I go for my scan this afternoon… This scan was scheduled at the last minute last week, so no early morning scan was available to me… I always like being one of the fist in the scanner, because then, they haven’t gotten behind schedule… And then tonight, I’m going to go downtown! I was invited to the Cardinals game VS the Angels… YAHOO! The Los Angeles Angels of Anaheim with Mike Trout and Shoie Ohtani… This will be fun! As a kid I always liked the Angles, because of their baseball caps that had a halo on top! Great marketing! Quck reminder, no Pfennig tomorrow, I’ll be back on Thursday, unless they size me up for a white suit and commit me! I guess i shouldn’t take that scene so light hearted… Sorry! Crowded House takes us to the finish line today with their 80’s song: Don’t Dream It’s Over… I hope you have a Tom Terrific Tuesday today… And please Be Good To Yourself!
Chuck Butler