November 15, 2022
* Currencies & metals get sold early, rally late
* Overnight the dollar gets sold…
Good Day! And a Tom Terrific Tuesday to you! Well, as you can tell, the Pfennig is a little later this morning than usual… The alarm went off, and I went right back to sleep, for I had a rough night, with my stomach… No biggie, just chemo stuff… I’m good to go today! I’m glad that years ago, I decided to take my chemo at night, so that if I had problems, they were during the night, and not during the day, when I needed to work, etc. From those dark days of a few years ago, when I was curled up in chair, and didn’t want to move, to these days, when I’m up moving, and going places… I have to say there’s a HUGE difference… The Stephen Kummer Trio greet me this morning from their album: Christmas In The City, and their song: When My Heart Finds Christmas…
Well, yesterday, was a strange one… The day started with the dollar being bought, and the BBDXY Index up 5 index points, and Gold down $12, and had all the inklings of a bad day for the currencies and metals, but that never came to fruition… And all day the currencies & Gold fought back, and at the end of the day, the BBDXY was up 3 index points, and Gold had turned that negative $12 loss into a 30-cent gain! I know, 30-cents is a long way from the $49 gain Gold had last Thursday, but hey! It was positive, and not negative, right? The euro remained above $1.03, and the Aussie dollar (A$) climbed over the 67-cents handle, and kiwi climbed over the 61-cent handle… These two have been the fastest moving currencies VS the dollar since last Thursday… Yen has wrapped a tourniquet around the bleeding it has been experiencing for over a month now, and has rallied nicely VS the dollar… There’s something there that I have to say, that’s not good about either currency… you know the dollar was getting sold widely, when the yen rallies…
So, Gold ended the day at $1,72.60, and Silver ended the day at $22.08… That’s the first time we’ve seen Silver back over $22 since 2014… I know that couldn’t be right, no? Well, according to the dollar/ Silver chart I looked at last night, it was 2014… Any way, it’s been a long time for Silver to get back into the game… Of course $22 is not what you and I would pay for Silver these days… The premiums are still outrageous, indicating the lack of supply in Silver… And it illustrates a picture that I’ve tried to paint for you previously, and that is… When the stars are aligned and the karma is flowing, and physical Gold & Silver are getting bought by the masses, the supply will become drained, and the premiums, if they are outrageous now, will be more than outrageous… So… What are you waiting on?
The price of Oil slipped again and ended the day trading with an $85 handle… That’s not the direction for Oil that our friends (NOT!) at OPEC wanted to see for Oil… Ahh, the best laid plans of mice and men, eh? I think they need to look further out on the horizon to see Oil climbing in price once again…
The 10-year’s yield rose yesterday and ended the day with a 3.88% yield. I told you yesterday, that I thought that calmer heads would come to the head of the class, and calm things down, an that is what it appears to have happened.
The overnight markets last night… The dollar was sold to the tune of 9 index points off of the BBDXY dollar index. The euro is trading above 1.04 this morning, and the yen is moving in the right direction too. Gold is up $4 in the early trading today, while Silver sees some profit taking moving it back below $22 this morning with a 22-cent loss. The price of Oil has slipped again, and trades this morning with an $84 handle, and Bonds are drifting… So, I guess that Oil’s future is all dependent on the timing of China’s opening / ending their zero Covid. You may recall that when it was rumored that China was going to open up, that all the anti-dollar assets, including Oil rallied strongly…
Well, I wanted to talk about this yesterday, and then plum forgot…Another “senior moment”… Remember John Corzine? He of the Wall Street golden boys, and went to start his own firm, only to have the whole thing blow up in his face, as he was guilty of taking client funds and trading them like the Company’s money… And after all the shame was placed on him, a few years later, he ran and became the Gov. of New Jersey!
The reason I bring this up, is that the FTX, let’s call him SBF, stared the crypto clearing company, and then began to move client funds to his trading partner firm…Sound familiar? Oh, and now there’s $1-$2 Billion missing… Wait! What? Yeah, it’s missing… And probably lost in the market… So, and bets on whether SBF is absolved of his crimes, in few years? I would almost bet on that one!
One of the things that propel inflation higher is “expectations”.. People believe that the prices they are going to pay for a new car will be higher in a couple of months, so they rush out to buy it now, and that propels inflation higher.. .So, expectations are very important to the Fed Heads when they look at inflation… I’ve told you before that the Fed Heads don’t really pay attention to the stupid CPI, but instead follow the PCE (personal consumption expenditures), and the expectations… Well, a day after the stupid CPI printed, the preliminary November data showed that inflation expectations rose for the second straight month with 1-year expected up from 5.0% to 5.1% and 5-10Y expected up from 2.9% to 3.0%
I know, if you’re like me, Lord help you!, You are laughing at the irony of these reports… The Fed Heads and their expectations of inflation… So, did you ask yourself this question, like I did, “I wonder when they began to expect inflation when they flatly denied it existed a year ago? “
Recall that I drew the picture for you sometime back, about how eventually, these rising prices will get to a breaking point, and when they do, that’s when the mobs of people show up at the Eccles Bldg., and demand the Fed Heads… I said that back when Sri Lanka was throwing their leader out, for allowing inflation to soar in that country… Well, news this past weekend had worker in Greece and Belgium striking because their wages aren’t keeping up with inflation… See, how this all reached a boiling point? We, as a country, are more tame than other countries, but still… there will be plenty of people at the boiling point that need to vent their frustrations…
The city of St. Louis, is getting an MLS expansion team… This has been in the works for a couple of years now… Thanks to my former colleague and good friend, Ty Keough, I’m a part of the initial season ticket holders’ group for the new team that will begin play in Feb… Those could be some really Cold games, brrr… And I won’t be here to attend them! Rick? You’re up buddy!
St. Louis City FC… not exactly a fancy name, but I think it works…
OK, back to the markets… Hey! I’ve got to have those breaks to clear my mind for a minute or two, and then pick it up again.. .So… here we go…. This past weekend I saw a Twitter comment from Sven Nordgren, of whom I’ve quoted before, so I had to check it out to see what he was referring to… And this is it… read this slowly so you get what I’m aiming for: “FED’S WALLER: THE FED WAS CAUGHT OFF GUARD IN 2021 WHEN INFLATION APPEARED TO MODERATE BEFORE EXPLODING.”
Well, I’m with Sven on this one as he replied “That’s utter Bull238#: How can you say things like that with a straight face? I would be laughing out loud and spewing spit all over from how riotous this statement that they made me make!
Maybe you got a little too descriptive there Chuck? Oh, well.. I’m sorry if I disgusted anyone, it’s not the first time nor the last time I will do that!
I found this on zerohedge.com last weekend… “In all the chaos over the past few days, we missed the release of the Fed’s latest Senior Loan Officer Survey which came out Monday. The results were striking: as one would expect from an economy in recession (and in some cases, depression), in nearly all categories, banks are reporting both tighter lending standards and sliding demand for new loans — and nowhere more so than in mortgages, both qualifying and otherwise, where demand has collapsed to “depression” levels as a result of the fastest every surge in interest rates.
But loan supply and demand aside, the punchline from the survey is that “most banks assigned probabilities between 40 and 80 percent to the likelihood of a recession in the next 12 months, with no bank reporting a probability less than 20 percent. Although banks in general assigned relatively high probabilities to a recession occurring in the next 12 months, most banks reported expecting the recession to be mild to moderate, should one occur. In addition, most foreign banks assigned a probability between 40 and 80 percent that a recession would occur in the next 12 months.”
Chuck again… just another in our collection of signs of a recession…
The U.S. Data Cupboard just has the Producer Prices Index (PPI) for Rocktober for us today, and it should continue to show that wholesale inflation is still perking along and sending higher prices to the retail operations… Tomorrow’s Data Cupboard is the big print of the week, with Retail Sales for Rocktober… So, until then, we have to make do with PPI…
To recap… The day began yesterday with the dollar getting bought, and Gold down $12, but the day ended with the dollar only up a bit, and Gold closing the day with a 30-cent gain Maybe calmer heads prevailed yesterday… I guess we’ll have to continue to monitor the trading each day, like I don’t do that any way!
For What It’s Worth… Well, a couple of years ago, I used to write a monthly letter for the Aden Sisters, Pamela, and Mary Anne, and in one of those letters I wrote about how the Central Banks were loading up with U.S. stocks, and pointed out that the Swiss National Bank (SNB) had really taken the Nestea plunge into U.S. stocks.. .Well, this article is about how they are now unloading those stocks… Uh-Oh… and it can be found here: https://wolfstreet.com/2022/11/11/the-swiss-national-bank-began-unloading-its-biggest-us-stock-holdings-incl-apple-microsoft-amazon-alphabet-meta/
Or, here’s your snippet: “The Swiss National Bank has spent years creating Swiss francs, buying dollars, euros, and other currencies with those francs, and then buying assets denominated in those currencies – including a vast portfolio of US stocks.
But that gig is up, it seems. Asset prices have fallen sharply, and the SNB is unloading. It doesn’t disclose details on its balance sheet, but it has to disclose its US stock holdings in quarterly regulatory filings with the SEC, and it now filed its Form 13F for its Q3 holdings. We’ll get to those in a moment.
The total of “Foreign currency investments” on its balance sheet – which includes US stock holdings plus its other foreign currency investments – peaked in February 2022 at CHF 977 billion ($1.04 trillion at today’s exchange rate). By the end of September 2022, they’d plunged by 17%, or by CHF 160 billion, to CHF 808 billion, the lowest since March 2020:
The composition of the CHF 160 billion plunge in its holdings is a mix of market prices, asset sales, and exchange rates of the CHF to the currencies involved.
From the SNB’s filings of Form 13F with the SEC, we can see that the SNB not only took losses from the price declines of its US stock holdings, but that it also sold down most of its largest positions, reducing the number of shares it holds in Apple, Microsoft, Alphabet, Amazon, Meta, etc.
From June 30 through September 30, the value of the SNB’s US stock holdings fell by 8.0 billion, or by 5.4”.
Chuck again… Well, I love it when a thought comes to fruition… you see in that letter about the SNB buying stocks I wrote about how when the stocks finally turn around, that the SNB would incur losses… of great magnitude, since their holding were HUGE!
Market Prices 11/15/2022: American Style: A$ .6748, kiwi .6158, C$ .7535, euro 1.0429, sterling 1.1956, Swiss $1.0429, European Style: rand 17.1947, krone 9.9235, SEK 10.3717, forint 389.83, zloty 4.5075, koruna 23.3222, RUB 60.57, yen 138.62, sing 1.3672, HKD 7.8267, INR 81.10, China 7.0378, peso 19.26, BRL 5.3260, BBDXY 1,2868.40, Dollar Index 105.81, Oil $84.82, 10-year 3.80%, Silver $21.86, Platinum $1,036.00, Palladium $2,094.00, Copper $3.77, and Gold… $1,776.01
That’s it for today… Tomorrow night we’ll have two soccer games in town… The City 2 team (mnor league) will play a team from Germany at our brand spanking new stadium, while across town the St. Louis U. Billikens men’s soccer team will play a 1st round game in the NCAA Tournament. Our Blues have closed the book on their 3rd period collapses, as they traveled to Colorado to play the defending Stanley Cup Champions last night and won! Let’s hope they never revisit that chapter! I’m waiting on any news of a Cardinals’ player acquisition… Free Agent signee, trade, waiver wire transaction, anything to keep baseball on our minds… Jack Jezzro takes us to the finish line with a song from his album: Bossa Nova Christmas, Home For the Holidays… I hope everyone can be near family at Christmas… I’m just saying… I hope you have a Tom Terrific Tuesday today, and please, pretty please with sugar on top, Be Good To Yourself!