He’s Baaaacccckkkk!

January 17, 2023

* the dollar buying has ended, for now… will it continue?

* Gold is on a bull run… will the “boys in the band” interrupt the run?

Good Day… And a Tom Terrific Tuesday to you! Well, I’m back! Now doesn’t that just make your day? HA! Happy New Year, too!  My winter vacation was fabulous, as I went on a 10-day cruise to the south Caribbean… Man did I have a grand time, too! Kathy and I went on the cruise with some near friends, and some new friends! Altogether there were 13 of us… And thanks to: John, Bill, Maureen, Tom, Mary, Larry, Patti, Denny, Nancy, for taking us into their travel group. Close friends, Kevin and Lisa were also with us, so it was a grand time had by all…  While we were gone, my oldest son, Andrew, celebrated his 41st birthday… I won’t see him again until April, so that will have to do, as far as birthday wishes go… Led Zeppelin greets me this morning with their rock classic song: Kashmir

Well, while I was gone, the dollar got knocked down and so far it hasn’t gotten back up… So, once again it was proven that “While Chuck is away, the currencies rally”… once again!   Like I’ve said many time, folks, for the right amount of money deposited to my bank account, I could be swayed to stay away forever… But, seeing no volunteers to make that deposit, I’m here until the spring, when I take my spring vacation… Don’t laugh, it’ll be here before you know it!

The BBDXY traded at 1,251, when I left you, (12/28) and ended the day yesterday at 1,227…  The euro has climbed back above 1.08, and all the other currencies are following the Big Dog euro, off the porch to chase the dollar down the street. And Gold? WOW! Gold has turned the table on the dollar, and had gained $116 at the close of business on Friday, from 12/28…  And now that Gold has moved past the $1,900 figure, Gold observers are now looking toward $2,000 for Gold.

Silver has lagged Gold’s move, but in the last day of trading last week, Silver got into the rally, and outperformed Gold in a percentage-wise basis.  Silver has gained 49-cents during that same period. The price of Oil has bounced around the $79 figure, while I was gone, and the 10-year Treasury’s yield was subdued at 3.50%…

So, getting back to my laptop, which I did take with me, but NEVER opened up, I went searching for the reason the dollar had been getting sold on a daily basis… And I found this on Bloomberg.com:

Finally! I put a lot of emphasis on that word, so let me try it again… FINALLY!  Ok, I guess it would behoove me to tell you what I’m talking about here… Well, Finally, the long run of the dollar bulls, seems to be ending… This from Bloomberg.com: ““Just two weeks into the year, and it feels like the big ‘buy dollar’ trade of 2022 is turning into the hottest macro short now,” said Patrick Bennett, strategist at Canadian Imperial Bank of Commerce in Hong Kong. In addition to the Fed, “we are also being driven by a reversal in China with Zero Covid scrapped well ahead of when it was expected.”

The dollar’s fortunes have suffered a dramatic U-turn in recent months as funds from JPMorgan Asset Management to Goldman Sachs Group Inc. predict the Fed will soon rein in the pace of its tightening. Traders are now expecting the Fed fund rate to peak at 4.94% from more than 5% earlier this month.”

Chuck Again… Again this is a case of Traders not buying what the Fed is selling…  And maybe, just maybe, they’ll be correct… I doubt it, but I’m telling you that there’s a chance!

In the overnight markets last night… well, we start the week on a sour note, as the overnight markets saw to buy dollars, for some unknown reason, but it is what it is, and the buying was soft, so no real damage has taken place, and the levels of weakness are such that they could easily be turned around in the U.S. session today. The BBDXY is up .75, so not even 1 full index point, while Gold & Silver are in the red this morning, with Gold down $8, and Silver down 12-cents to start the day… Like I just said, I don’t see this as anything that we have to get all worried about… A trend is not a ONE-WAY Street, folks… I know it seemed like it was when the dollar was in its strong trend, but that’s not the way trends work.

The Price of Oil has climbed to $80 once again, how long will that last? This is the 3rd time in the last couple of months that the price of Oil has climbed to $80, only to see it lose that figure quickly, and then struggle to regain it.  The real unknown here is how strong the Chinese economy will become now that they’ve opened up. If China comes back gangbusters like they used to be all time, then the price of Oil will rebound nicely, but if China struggles, ala the U.S. after our shutdown, then we’ll continue to see the price of Oil struggle…  That’s my story and I’m sticking to it!

The Bond market still isn’t buying what the Fed/ Cabal / Cartel is selling, which is the idea that they will continue to hike rates to combat inflation… On the recent cruise I was on, some folks asked me about inflation and if it was here to stay… I told them that while other items that were caught up in the rise of inflation, are going to see deflationary pricing going forward, the price of food will continue to be a real problem…  They asked me why? I said, think about this the way I do… Russia has been made out to be the evil twin that terrorizes the world, and their products are shunned by the West… But Russia is responsible for the production of fertilizer, and the major producer of it, I might add… If Farmers have to beg, borrow and steal to get fertilizer for their crops, the price of those crops will continue to be pricey…   I then told them that they can get that kind of information and more by signing up to the read the Pfennig!  HA!

Yesterday was a holiday in the markets here in the U.S. So, this seems like as good a place as any to get back into the saddle and start writing again, eh?  Well, here we go again, with the bread and circuses that surround the debt ceiling…  Treasury Sec. Janet Yellen, sent a message to Congress last week alerting them that the Gov’t will have to revert to “ Extraordinary Measures”, if Congress doesn’t raise the debt ceiling like they have 78 times previously…   There are all kinds of nasty things that could happened should the debt ceiling not be raised, and the “extraordinary measures” run out… 

Remember when I told you almost 2 years ago, that debt defaults were coming, from countries around the world, and that did not mean the U.S was going to avert defaulting…  I read an article yesterday, while waiting for the last Wild Card Game in the NFL to be played, that talked about how the writer thought that the U.S. will have a default by mid-year, and it could last a couple of weeks…  Now that’s scary, and I can’t blame anyone for selling dollars right now…

While I was away, the December Jobs data came through… I shake my head in disgust at how these numbers are compiled by the BLS, but, in the end, the markets believe them for what they are supposed to be, and in December the BLS said that 223,000 jobs were created…  Then a couple of days later there was this headline : Layoffs are on the rise, but nearly 50% of workers are still looking to quit in 2023…

So, riddle me this Batman…  how can jobs created be so strong, when Layoffs are on the rise?  For instance, Amazon announced that they would lay 18,000 employees off… And there are others that fall in behind Amazon…

So, the beat goes on… The beat goes on… The BLS keeps printing worthless reports, and the beat goes on…

Across the pond, things are much better, and in some cases in far away Japan, things are worse than they are here in the U.S. There are now thoughts that the European Central Bank (ECB) will keep hiking rates, and here in the U.S. thoughts are that the Fed/ Cabal/ Cartel are nearly finished with their rate hikes, and therefore, the dollar gets sold, and the euro gets bought. The Swiss franc is trading over 1.07, and it gets bought.. Shoot Rudy! Even the Russian ruble has gotten over its recent bout of weakness, and is back to trading with a 68 figure.

Inflation reports recently that inflation is cooling… Beware of what I told you about how the markets thought that inflation was defeated in 1980, only to get the stuffing knocked out of them when it came back stronger a couple of months later.  The Fed Funds went from 20% to 16%, and then right back to 20%, when Paul Volcker realized he had cut rates too quickly…

The U.S. Data Cupboard starts the week slowly, with only the Empire State ISM (manufacturing) report for December to print today… Tomorrow, we get data by the truckload, leading off with Retail Sales for December… The Christmas shopping season and all that… Well, I don’t want to be the bearer of bad news, but I have to be… The Butler Household Index (BHI) indicates that this report will be bad…  Especially since it was the shopping season, and all that…

To recap… The dollar has been getting sold since Chuck has been away, same-o, same-o… Gold has been on a rampage, and Silver is lagging… Chuck is sure that the boys in the band are doing their best to keep Silver below $25, because from there, $25 could be a launching pad to higher levels… Chuck reminds us of the inflation faux pas to addressing inflation in the 1980.  There’s also some talk this morning in this fine piece of journalism (as if!) that talks about the dollar getting sold, and why…

For What It’s Worth… This article asks a lot of questions, as to how we got to where we are, and so on… I found this in Ed Steer’s letter www.edsteergoldsilver.com , and I hope you enjoy it…  And it can be found here: The Coup We Never Knew (townhall.com)

Or, here’s your snippet: “Did someone or something seize control of the United States?

What happened to the U.S. border? Where did it go? Who erased it? Why and how did 5 million people enter our country illegally? Did Congress secretly repeal our immigration laws? Did President Joe Biden issue an executive order allowing foreign nationals to walk across the border and reside in the United States as they pleased?

Since when did money not have to be paid back? Who insisted that the more dollars the federal government printed, the more prosperity would follow? When did America embrace zero interest? Why do we believe $30 trillion in debt is no big deal?

When did clean-burning, cheap, and abundant natural gas become the equivalent of dirty coal? How did prized natural gas that had granted America’s wishes of energy self-sufficiency, reduced pollution, and inexpensive electricity become almost overnight a pariah fuel whose extraction was a war against nature? Which lawmakers, which laws, and which votes of the people declared natural gas development and pipelines near criminal?

Was it not against federal law to swarm the homes of Supreme Court justices, to picket and to intimidate their households in efforts to affect their rulings? How then with impunity did bullies surround the homes of Justices Brett Kavanaugh, Samuel Alito, Amy Coney Barrett, Neil Gorsuch, John Roberts, and Clarence Thomas – furious over a court decision on abortion? How could these mobs so easily throng our justices’ homes, with placards declaring “Off with their d–s”?

Since when did Americans create a government Ministry of Truth? And on whose orders did the FBI contract private news organizations to censor stories it did not like and writers whom it feared?

When did we assume the FBI had the right to subvert the campaign of a candidate it disliked? Was it legal suddenly for one presidential candidate to hire a foreign ex-spy to subvert the campaign of her rival?

Was some state or federal law passed that allowed biological males to compete in female sports? Did Congress enact such a law? Did the Supreme Court guarantee that biological male students could shower in gym locker rooms with biological women? Were women ever asked to redefine the very sports they had championed?

When did the government pass a law depriving Americans of their freedom during a pandemic? In America can health officials simply cancel rental contracts or declare loan payments in suspension? How could it become illegal for mom-and-pop stores to sell flowers or shoes during quarantine but not so for Walmart or Target?”

Chuck again… All good questions… And there’s more of these questions on the web site linked above… I do want to touch on something that he mentioned overtly… The talk going around about how the green folks want to ban gas burning stoves… OMG! When or where is this going to stop? This is madness! Serenity Now!

Market Prices 1/17/2023: American Style: A$.6952, kiwi, .6402, C$ .7458, euro 1.0831, sterling 1.2256, Swiss $1.0850, European Style: rand 17.1019, krone 9.9221, SEK 10.4199, forint 369.06, zloty 4.3362, koruna 22.1536, RUB 68.79, yen 128.63, sing 1.3222, HKD 7.8220, INR 81.76, China 6.7779, peso 18.76, BRL 5.1431, BBDXY 1,227.50, Dollar Index 102.26, Oil $80.07, 10-year 3.54%, Silver $24.09, Platinum $1,062.00, Palladium $1,751.00, Copper $4.13, and Gold… $1,912.76

That’s it for today…  Well, my first day back in the saddle today, felt good… I did feel out of touch with the markets a bit though, and that will be corrected as we go along this week… We had a cold spell this weekend down in South Florida, and our “winter” came and went, and yesterday I sat outside all day on a beautiful day… The South Florida sun has warmth, but not intensity like it will have as the days go one into summer, and so being outside all day is so comfortable. My good friend, Gus, the martini guy, is down here this year after a 2 year absence. We went out for martinis when I got back! It was so good to see him again! Our other friends from the north, Jack and Lorraine are here too, and so we all sat out on the deck yesterday afternoon and gabbed… Matthew Sweet takes us to the finish line today with his song: Evangeline… Reminded me of the time I saw Matthew Sweet, ,in concert,  at Mississippi Nights, many moons ago! I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!


Chuck Butler