November 10, 2022
*currencies & metals drift ahead of the CPI print
* Don’t Forget to say, “Thank You” to a veteran…
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, no baseball, no hockey, and some MAC college football game on, led me to my writing desk to read emails that I hadn’t gotten to yesterday, during the day, because it was so darn beautiful outside. The weather people tell me that we’ll have one more day of unseasonably warm weather, and then the bottom drops out and we return to normal, gray skies, cold raw, dreary, November days… In my reading last night, I came away convinced that I’m on the right track here with my thoughts that I’ve shared with you all… The Eddie Higgins group greet me this morning with their version of one of my fave Christmas songs: The Christmas Waltz
The dollar stopped getting sold yesterday, and maybe just for a day, it would appear to me to be a brief correction of sorts. During the last weak dollar trend, not every day saw the dollar getting sold, and I would always remind people that “A Trend Is Not A One Way Street”… So, unless we see consecutive days of dollar buying, then I would not be afraid to say that that a prolonged dollar selling period is upon us… The BBDXY gained 6 index points yesterday, but as soon as the U.S. trading session ended, the BBDXY was already giving back a couple of index points. The euro remained above parity with the dollar, and that was a good sign toward the thought I had above…
Gold is up one day, down the next, and the up days are monster days of gains, while the down days are meh… So, that leads me to believe that Gold has turned the corner… Gold lost $5.90 yesterday to close at $1,707.70, and Silver lost 29-cents to close at $21.13… The price of Oil lost $2 in trading yesterday and ended the day with an $85 handle… Proving once again that Chuck gave it the kiss of death, when he talked about how he saw Oil returning to the $100 level… Not so fast Tim! With China still on Covid lockdown, the demand is watered down, and so I get why the price of Oil has slid this week…
The 10-year Treasury rallied yesterday, with the yield dropping to 4.09% from 4.13%, to start the day. Remember, when bond yields go down, the price of the bond goes up, and vice versa… So, someone was buying the 10-year yesterday… Why? Oh, well, it is, what it is…
In the overnight markets last night… There was little to no movement in the currencies or the metals, with the BBDXY only off pennies, and Gold up just pennies… I think the traders were of the mind to just sit back and wait for the stupid CPI print that will come to us this morning. As I told you yesterday, traders are of the mind that has consumer inflation falling below 8% for Rocktober, and if that’s what happens, then they believe the Fed Heads rate hikes won’t continue to be so aggressive, and that thought brings us to a weaker dollar… The thigh bone is connected to the knee bone, that’s connected to the shin bone, etc. Sometimes you have to follow the string of events to get to what’s really eating at Traders…
The price of Oil is weaker by pennies this morning and trades with an $85 handle, and Bonds didn’t move one iota overnight… So, everyone is on board with the wait-n-see what CPI brings us thought of mind this morning… To me, I don’t think today’s stupid CPI will actually tell us anything important… Inflation is not getting beaten back, and any slippage of consumer inflation is a matter of how much the data was massaged, marinated and cooked, in my opinion…
I’ve been quite wordy this week in each Pfennig…I hope to put an end to that trend, today… Well, I was surprised to see that my fellow Missouri voters, voted to legalize pot… The image of folks in Missouri by those on the East Coast, is well deserved…We are steady in our ways, we don’t jump off cliffs for the latest fads, we don’t go hog wild with false idols, etc. and therefore, I was sure that the legalize pot vote would e no… Hmmm…
OK… onto the ways of the world, and other things… I read last night that consumer confidence in housing hit the skids in Rocktober, and Just 16% of consumers said they felt it was a good time to buy a house in Rocktober, according to Fannie Mae’s monthly survey. That figure marked a record low since the survey was first conducted in 2011. It was only a matter of time before the housing sector succumbed to the aggressive rate hikes by the Fed Heads.. .But the housing bubble was in need of finding a pin to pop it, and I do believe that the rate hikes have become that pin…
So, we have that going for us, coming up soon… Bill Bonner refers to the markets before this all began, as the Bubble Epoch…or the everything bubble… That included stocks, bonds, housing, and then the list becomes crazy, with the likes of Bitcoin, and the other things that have been brought to the market, that have been outrageously priced..
So, the next bubble to pop after housing, will be stocks… I don’t know when or how deep it will be, but the bubble will be popped… Once again last week, James Rickards, said that the stock market would collapse at 2:00 pm EST last Wednesday, after the Fed announced their rate hike… This was the 4th time he had noted a time and date for the stock market collapse… Yes, the stock market is off 20-something percent, but collapsed? Well, I’ll let you make that call… I just don’t think putting dates an times on things that might happen, even if you’re absolutely certain that they will happen is just nuts… I’m just saying..
I carried on yesterday with regard to what if we, as a country, had remained on the Gold Standard… That got me thinking about when I told you that Rep. Alex Mooney (R-WV) introduced bill HR9157 to congress to put the US back on a gold standard… Now you and I know that the bill has a snowball’s chance in hell to get passed, but when asked about it, Rep. Mooney had this to say: “”The gold standard would protect against Washington’s irresponsible spending habits and the creation of money out of thin air,” Rep. Mooney said in a statement. “Prices would be shaped by economics rather than the instincts of bureaucrats. No longer would our economy be at the mercy of the Federal Reserve and reckless Washington spenders.”
Now, doesn’t that sound like a monetary policy we all would want to see in place? So, why does the decision to go or not go to a Gold Standard, rest with Congress, and not with the American People? We The People… Everyone should send a note to their elected officials and tell them you want the U.S. dollar to be backed by Gold…
Just think… I wouldn’t have anything to write about, and I would be put out to pasture, yet again… Let’s see, I was first put out to pasture by Mercantile Bank, then it was TIAA Bank, then the Gold Standard…Pretty good as far as I’m concerned, then I could write a blog about music… I’ve been asked to do that by a few readers through the years…
The U.S. Data Cupboard finally gets back on board today with some data prints that mean something… First up will be the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, then that will be followed by the Rocktober print of the stupid CPI, and finally the Real Hourly Earnings report… Last month the Real Hourly Earnings Report showed that in Sept wages actually saw a drop… So, wages certainly are not keeping up with inflation, and that can only go on for so long, before Moms and Pops all over the country throw their hands up in the air, and say “no mas!” Honey? Where’s that pitchfork? I need to call on someone….
To recap… The dollar’s consecutive days of getting sold came to an end yesterday… The BBDXY gained 6 index points yesterday, but the euro remained above parity with the dollar. Gold & Silver also got sold yesterday, so it’s been up one day, down the next, with these two this week… That would mean that today is an up day… I guess we’ll see, eh? Consumer Confidence with housing is at an all-time low, since records were being kept… Chuck called this the inevitable… The rate hikes by the Fed Heads were bound to become the pin the room to pop housing’s bubble…
For What It’s Worth… It’s been some time since I highlighted a report by Pam & Russ Martens, but that ends today, as they recently did a bang up job writing about the Fed’s Stability Report, and their report can be found here: Quietly, the Fed Releases Its Financial Stability Report and Lines Up a Scapegoat (wallstreetonparade.com)
Or, here’s your snippet: “One minute after the stock market closed on Friday, the Federal Reserve mailed out a link to its newly-released Financial Stability Report to folks who have signed up to get press releases from the Fed.
For those of you who have been reading our reports on the Fed for years – its unaccountable money printing and bailouts of Wall Street, the opaque activities of the trading floors owned by the New York Fed, its unchecked conflicts of interest, and its brazen, and as yet unprosecuted, trading scandal – you might suspect that the Fed would have pulled a lot of punches in its “Financial Stability Report.” You would be correct.
On the topic of derivatives, which remain the greatest risk at the mega banks on Wall Street, the word “derivatives” is mentioned just eight times in the report – with little clarity. For Wall Street On Parade’s multitude of warnings on the actual risks posed by derivatives, see our “Related Articles” below.
Another key risk to financial stability in the U.S. is the “interconnectedness” of the mega banks on Wall Street. This means that if one mega bank becomes insolvent or starts to teeter – as Citigroup did in 2008 – the systemic contagion spreads to the other mega banks that are counterparties to its derivatives, which in turn infects the entire financial system.
The word “interconnected” appears just four times in the Fed’s Financial Stability Report. The following text provides a picture of what the Fed would rather not talk about in any depth.
“Disruptions to economic activity or financial markets abroad can affect the United States through several channels. A pullback in risk-taking worldwide may cause further declines in asset prices and tighter credit conditions abroad and in the United States. Some U.S. investors would incur losses on foreign exposures, and foreign financial institutions would likely reduce lending to U.S. businesses. Foreign investors could sell Treasury securities and other safe U.S. assets, potentially adversely affecting financial-market functioning and the transmission of monetary policy. Foreign official holders might sell reserves to defend home currencies, and private holders might sell Treasury securities in the context of a widespread surge in demand for dollar cash buffers. Broader pressure on large internationally active foreign banks could — if sufficiently severe — result in material spillover to U.S. financial stability through strains on dollar funding markets (in which foreign banks are large participants) and interconnectedness with U.S. banks, although the effects would be mitigated by the resilience and sound capitalization of the U.S. banking system. More generally, modern financial markets are interconnected, so stresses abroad could lead to strains in U.S. markets and challenges for U.S. financial institutions.”
Chuck again… The Fed needs a scapegoat for when this all blows up in our faces… And Pam and Russ point out that “the Fed also wants to have a scapegoat lined up to point the finger at when things blow up, so it adds: “More generally, modern financial markets are interconnected, so stresses abroad could lead to strains in U.S. markets and challenges for U.S. financial institutions.”
Market Prices 11/10/2022: American Style: A$.6393, kiwi .5843, C$ .7370, euro .9995, sterling 1.1375, Swiss 1.0105, European Style: rand 17.8020, krone 10.4358, SEK 10.9375, forint 402.88, zloty 4.7356, koruna 24.5002, RUB 61.29, yen 146.49, sing 1.4038, HKD 7.8485, INR 81.81, China 7.2533, peso 19.57, BRL 5.1967, BBDXY 1,319.22, Dollar Index 110.89, Oil $85.27, 10-year 4.09%, Platinum $993.00, Palladium $1,849.00, Copper $3.62, and Gold… $1,707.96
That’s it for today… I hope all my neighbors in S. Florida have taken precautions with the strong Tropical Storm that will turn into a hurricane bearing down on our region… Hurricane Nicole, is going to give the Florida Treasure Coast a major headache… It had been a relatively quiet hurricane season in Florida, with only the devasting Ian that hit Florida last month on the Gulf side.. Well, we’re on our way to Thanksgiving, that will come in 2 more weeks… I know, how’d that happen, right? But first, we have Veteran’s Day tomorrow…This is a BIG DAY as far as I’m concerned, as I used to always take the day off of work, to drive to Gerald Missouri, and visit my Dad’s, a WWII Veteran, grave site… I’m thankful for all the veterans who fought wars to keep us safe and free… At Roger Dean Stadium, before each spring training game, they ask all veterans to stand so they can be recognized… I think all stadiums should do that! Ok… Former colleague, Antione, sent me a note yesterday telling me his has Pandora’s Smooth Jazz Station on too! So, Jack Jezzro takes us to the finish line today with his version of the song: Here Comes Santa Claus… I hope you have a Tub Thumpin’ Thursday today, and don’t forget Veteran’s Day tomorrow… Please remember to Be Good To Yourself!
Chuck Butler