January 13, 2022
* currencies are on the warpath VS the dollar
* Inflation hasn’t been on the way tup like this since 1978!
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, my hopes that our Blues had passed their bouts with Covid already this year, was washed down the drain last night, when it was learned that they will be without 5 intregal players for their game tonight VS Seattle. I feel bad for jinxing them… Oh well, the game goes on with the players that they have. It was another rainy, windy day here with overcast skies, all day… YUCK! A cold front came through, and reduced the daily temps from 80 to 73… Still warm by my standards, especially in the Floriday sun! My beloved Missouri Tigers couldn’t stand prosperity, as they lost their basketball game last night VS Arkansas… The Rolling Stones greet me this morning with their song: Can’t You Hear Me Knockin’
I told you, I told you, I double, double told you, that Inflation in December would still be increasing, and yesterday when the stupid CPI printed it revealed that the annual inflation rate in the U.S. in December was 7%, up from 6.8% in November. And the dollar took the brunt of that report, with the euro climbing above 1.14 for the first time in months, and the BBDXY falling out of bed to the tune of a 7 point drop in the index to 1,165… For once, in a blue moon, the currency traders did the right thing and sold dollars like funnel cakes at a State Fair.
I read a blurb on Bloomberg.com this morning that talked about how the word across trading rooms right now is “sell dollars, buy anything else”…
But this inflation of 7% is different than that last time we were at 7%, which was 1982… Can you guess what the difference is? Ok, I’ll tell you… In 1982 when inflation printed at 7%, it was going down from its high of 13% the year before… And now the 7% inflation print is trending higher, so they are different… One (1982) was optimistic, while the one now is pessimistic…
So, if we go back to when was the last time inflation was heading higher and hit 7%, we would have to go back to 1978… And at least the Fed then was hiking rates and attempting to bring inflation under control… Our Fed/ Cabal/ Cartel is still sitting on their collective hands… I mean give me a break Powell! If you think, and have said, that inflation is a problem and that higher interest rates will be needed, but you’ve put the rate hike off until March, what gives? If rates need to go up, they need to go up now! You, fumbling, bumbling, poor excuse of a Central Banker… Go ahead, and wait, because by the time you get around to hiking rates, inflation could very well be 10%, and that’s low because it’s the stupid CPI… If we calculated inflation the way it used to be calculated before the hedonic adjustments were added in the 90’s, Inflation is really running at 15.2%, according to shadowstats.com…
On Friday last week, Gold reacted to something Powell said, and gained $20 on the day… After yesterday’s inflation print you would think that at least another $20 gain would be in the books for Gold, right? Well, the price manipulators kept a tight lid on Gold, with their price suppression paper trades, and the shiny metal only eked out a $3.80 gain on the day to close at $1,826.50… Silver found a way to move strongly above the $23 handle as it gained 35-cents on the day, to close at $23.22… The euro traded over into the 1.14 handle, the Aussie dollar (A$) rose above 72-cents, and so on… The Petrol Currencies are really seeing some interest in them… As are the Commodity Currencies…
The price of Oil traded over $82 yesterday, and from what’s gone on in the past 24 hours, it shouldn’t take it long to get through the $82 handle either! And Bonds… This is where I should be telling you bonds fell out of bed, and the yield rose by large margins… But I’m not, because Bonds did nothing yesterday, as bond traders shrugged off the CPI report, for some unknown reason…
In the overnight markets last night… Before I went to bed last night, I checked to see what the dollar was doing overseas, and it had seen some buying… not much, but some buying, but as I turn on the screen this morning, the dollar is getting sold again… The BBDXY has slipped to 1,164.33 from the close last night of 1,165.79… As I said above the Commodity Currencies are really perking up…
Gold & Silver are basically flat this morning with Gold down a buck and Silver up 9-cents, so no real movements there yet. I’m no board with the idea that Gold & Silver are preparing for big upward movements…
The price of Oil has slipped about 20-cents early this morning, and Bonds are still stuck in the mud.. You know… right now I wouldn’t touch a U.S. Treasury Bond with YOUR Ten foot pole! Because yields are going to be rising, and that’s no time to be looking to buy bonds…
At this point, I want to circle back to something I mentioned above… that the trading rooms are all saying, “sell dollars, buy anything”… That’s the recipe for a dollar rout that leads to a long-term downward dollar trend. Of course we need some more data to confirm that, but I noticed something the other day that I’ve talked about for years now, and that is the Euro Wannabes, of forints, zloty and korunas have all been on the rally tracks in recent days… And I’ve always said that when these three get moving upward against the dollar, that it’s a good sign that the dollar is heading to a long-term downward movement…
And don’t look now, but the price of Copper is on back on the rally tracks… Copper last year soared in price during the early days of inflation, and then dropped back, giving some people the thought that the inflation was indeed just transitory, but as I just said, Copper is back on the rally tracks and has moved higher this week. Copper has long been a key indicator of where inflation is headed….
Oh, and one more point on the rising inflation…. Back in 1984, I bought my first house… And the home loan’s interest rate was tied to the 90-day T-Bill rate, which meant for the first year of the loan I paid 12% interest… Can you imagine, if interest rates today were more than 12%? The song by R.E.M. is playing in my head right now… “It’s the end of the World as we know it”… Because… in my humble country boy opinion… This is just the beginning of where inflation is heading and how the Fed/ Cabal/ Cartel fails to respond appropriately…
And I don’t think I need to remind you, but I will any way… Inflation is just one of the barrels of the two-barreled shotgun that we are starting at right now, Inflation is a form of a purchasing power being taken away from your dollar… The other barrel? Well, that’s dollar depreciation, which is another form of purchasing power being taken away… We as a country have rarely faced down the double barreled shotgun, but… I do believe that we are now… The dollar has lost major ground in the last week, and if that continues, Katy bar the door! The thing with shotguns is that it spreads it buckshot all around, and when both barrels are fired, everyone gets hit with some buckshot… That’s about as nice as I can put what’s going on here, folks…
And Doug Casey believes that “We’re on the cusp of the most significant changes in money and finance in world history…” And if you’d like to know more about what he sees coming, you can click on this link: The Great Monetary “Reset” of 2022 – Doug Casey’s International Man
Remember when I explained to you how when the rubber hits the road, that the new digital dollar would be introduced? And we would from then on only be allowed to use digits to spend, and that the end of our civil liberties would be taken from us? I do believe, we’re getting closer all the time to that scenario…
So… after all that, I have just one question for you…. Got Gold?
In my perusal of Twitter yesterday, I found this Tweet, that hit home BIG TIME, and this is what I saw from Marc-André Fongern
What the Fed has achieved so far:
1) Intensified inequality
2) Made the rich even richer
3) Boosted inflation alarmingly
4) Inflated stocks massively
5) Engaged in insider trading
Impressive. Congratulations.
Chuck again… Ok, today’s U.S. Data Cupboard will have the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, and… PPI (wholesale inflation) for Dec. Remember last month when I told you that the high PPI number would feed CPI this month? Well, we all know what happened there don’t we?
We’ll end the week tomorrow with a data Crescendo! December Retail Sales will print, and according to the BHI (Butler Household Index) it will remain strong… And then the duo of Industrial Production and Capacity Utilization for Dec. will print, along with Business Inventories… So, a busy data day tomorrow…
To recap… Inflation in Dec soared to 7% annually, and Chuck points out that the last time we saw inflation rising through 7% was 1978… Carter era inflation is among us folks… And it’s only going to get worse, in my opinion… the dollar got sold like funnel cakes at a State Fair, while Gold had to fight tooth and nail to eke out a $3.80 gain on the day… I know, I know, the pricing in Gold yesterday makes no sense to me either! Chuck rambles on and on and on about inflation this morning, and then asks… Got Gold?
For What It’s Worth…. Egon Von Greyerz is back for our FWIW article today, with an article he penned titled: COMING MARKET MADNESS COULD TAKE 70 YEARS TO RECOVER, and this article can be found here: COMING MARKET MADNESS COULD TAKE 70 YEARS TO RECOVER – Matterhorn – GoldSwitzerland
Or, here’s your snippet: “n the midst of market madness, risk doesn’t exist because lunatics neither see, nor worry about risk. And still, 2022 will be more about risk and survival than anything else. So I will obviously talk more about “The Triumph of Survival” which I discussed in a recent piece.
“When life itself seems lunatic, who knows where madness lies.” – Don Quixote
The year 2022 will most likely be the culmination of risk. An epic risk moment in history that very few investors will see until it is too late as they expect to be saved yet another time by the Fed and other central banks.
And why should anyone believe that 2022 will be different from any year since 2009 when this bull market started? Few investors are superstitious and therefore won’t see that 13 spectacular years in stocks and other asset markets might signify an end to the epic super bubble.
The Great Financial Crisis (GFC) in 2006-9 was never repaired. Central bankers and governments patched Humpty up with glue and tape in the form of printed trillions of dollars, euro, yen etc. But poor Humpty Dumpty was fatally injured and the intensive care he received would only give him a temporary reprieve.
When the GFC started in 2006, global debt was $120 trillion. Today we are at $300t, rising to potentially $3 quadrillion when the debt and derivative bubble finally first explodes and then implodes as I explained in my previous article.
To call the end of a secular bull market is a mug’s game. And there is nothing that stops this bubble from growing bigger. But we must remember that the bigger it grows, the greater the risk is of it totally wiping out gains not just since 2009 but also since the early 1980s when the current bull market started.
The problem is also that it will be impossible for the majority of investors to get out. Initially they will believe that it is just another correction like in 2020, 2007, 2000, 1987 etc. So greed will stop them from getting out.
But then as the fall continues and fear sets in, investors will set a limit higher up where they intend to get out. And when the market never gets there, the scared investor will continue to set limits that are never reached until the market reaches the bottom at 80-95% from the top.
And thus paper fortunes will be wiped out. We must also remember that it can take a painstakingly long time before the market recovers to the high in real terms.
The 1929 high in the Dow was not even recovered in real terms by the mid 1960s. Finally it was surpassed in 2000.
This means that it took 70 years to recover in real terms! So investors might have to wait until 2090 to recover the current highs after the coming fall.”
Chuck again… I know the snippet is quite long today, but since I don’t write on Fridays , this will give you something to do tomorrow! HA!
Market Prices 1/13/2022: American Style: A$ .7295, kiwi .6873, C$ .8011, euro 1.1454, sterling 1.3724, Swiss $1.0964, European Style: rand 15.3733, krone 8.6714, SEK 8.9583, forint 310.14, zloty 3.9583, koruna 21.3158, RUB 74.54, yen 114.49, sing 1.3457, HKD 7.7908, INR 73.85, China 6.3602, peso 20.39, BRL 5.5575, BBDXY 1,164.83, Dollar Index 94.86, Oil $82.48, 10-year 1.74%, Silver $23.31, Platinum $983.00, Palladium $1,984.00, Copper $4.48, and Gold… $1,824.90
That’s it for today and this week… The sun will come out tomorrow, bet your bottom dollar that tomorrow, there’ll be sun… I sure hope so… I for one can’t begin to imagine how depressing it would be for me to live in the rainy N.W. I’m just saying… The NFL Playoffs begin this weekend, with games on Saturday, Sunday and one final game on Monday to finish the weekend of games… As I’ve told you before, I got turned off the NFL football a few years ago now, and haven’t really ever come back to it… I think I watched 2 complete games this year… Having said that, I will root for the K.C. Chiefs, and the Packers during the playoffs… Our Blues get back on the ice tonight, Let’s Go Blues! Steely Dan takes us to the finish line today with their song: Peg… I hope you have a Tub Thumpin’ Thursday and a Wonderful Weekend, Please be Good To Yourself, and remember to Be Positive, Test Negative!
Chuck Butler
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