January 18, 2022
* yesterday’s low volume garnered dollar buying…
* China cuts their key interest rate…
Good Day… And a Tom Terrific Tuesday to you! If you’ve ever wondered, wondered whatever happened to me… Yes, yesterday was a national holiday, so there was no Pfennig… And that song was taken from one of my old fave TV shows, WKRP… Well, did all the NFL playoff games go the way you thought they would go? I actually watched a few of the games, because on Sunday, here, it was a stormy, windy day with no sunshine, so I hunkered down inside and watched some football… My Billikens basketball team won their game on Saturday, while my Mizzou Tigers lost theirs… Two programs going in opposite directions…. We had some strange market reactions late last week, are you ready for me to rip them up? Midnight Oil greets me this morning with their song: Beds Are Burning…
Riddle me this Batman… How does a 1.9% negative print in Retail Sales, in December no less, and a contraction of Industrial Production, and a drop in Consumer Confidence in the U of Michigan report for this month, equal a rally in the dollar? Do, these knuckleheads really believe that these awful prints mean the Fed won’t hike rates? GIVE ME A BREAK! Did they really believe that the negative print in December Retail Sales means that inflation would be slowing? C’MON, Don’t they know that the negative print was brought about by higher prices that inflation caused? I’m at a loss, Robin, and for once I don’t have an answer for you….
And so it was for the data late last week… Retail Sales showed a negative -1.9% print for DECEMBER! You know, Christmas shopping and all that? How on earth can an economy come back strong without consumer consumption? Oh, well… that was that… Then on the same day, Industrial Production, showed a contraction that was unexpected… Uh-Oh… And then finally, the U of Michigan Consumer Confidence report showed a drop that again was unexpected. In my opinion, it’s about time that consumers began getting worried… Inflation is kicking tail and taking names later, while the Fed/ Cabal/ Cartel sits on their collective hands and do nothing… and The POTUS’s programs of spend, spend, spend, are beginning to falter…
So, like I mentioned above, the dollar rallied on those ugly prints, on Friday… Gold lost $4, Silver lost 10-cents, and the BBDXY gained over 2 points on the day finishing the week at 1,167.34… Gold ended the week at $1,818.40, and Silver ended the week at $23.06… And the BBDXY ended the week at $1,167.34… The euro gave up the 1.14 handle that it so proudly displayed the previous two days, and the Russian ruble got smacked around the head and shoulders…
Stranger days have happened in the past, but Friday’s markets reaction is up there among the top ten of those strange days, for sure!
There was trading in the overseas markets yesterday, and Gold traded without the U.S. suppressing its price… But the volume was very soft, so there was little to no movement in the dollar or metals yesterday… Gold lost $1.10, and Silver lost 2-cents on the day… And the dollar buying continued with the BBDXY rising to 1,168.32… But all-in-all it was a nothing day in the markets, except if you consider the price of Oil being a part of it all, and I do… Don’t look now, but the price of Oil is trading with an $85 handl e this morning.
In the overnight markets… There was still more dollar buying, with the BBDXY rising to 1,170. this morning… Gold is down in the early trading $5.50, and Silver is down 5-cents… What’s up with all of this? I had thought that maybe, just maybe, ’cause you never know, that maybe we had turned the corner with the dollar last week… but it’s a new week and things have certainly changed, once again.
Well, China decided that with a good number of their cities closed down, and the drop in their Retail Sales, that they had better cut their interest rate, and they did, cutting it 25 BPS to 2.85%… Most Central Banks around the world are either contemplating hike rates, or have already hiked rates, and then China decides to go in the opposite direction…
And don’t look now, but the yield on the 10-year Treasury has bumped higher to 1.82%… Rising bond yields is not going to be a piece of cake for the stock jockeys folks… Without the Fed/ Cabal/ Cartel buying 3/4’s of the Treasury auction every month, this was bound to happen…
OK, let’s see what else is in the news today…
Another one bites the dust… Did you hear last week that Richard Clarida the Fed/ Cabal/ Cartel vice chairman was resigning? Seems he got caught with his hands in the cookie jar, like his fellow Fed/ Cabal/ Cartel members… This past weekend, in Ed Steer’s Saturday edition, he had a cartoon, that says it all about these crooks at the Fed/ Cabal/ Cartel… It was a cartoon where they had a congressional panel interviewing Jerome Powell Chairman of the Fed/ Cabal/ Cartel, and the one panelist says, “Just one more question… Do you have any stock tips for us?”….
Then on Saturday, I read a report from a former insider at the Fed/ Cabal/ Cartel, and he stated that “I was talking about corruption in the Fed, institutionally, in a more profound sense–an entanglement with Wall Street both intellectually and financially and, sadly, dragging the academy along behind it.”
Geez Louise… that’s a damning article for the Fed… too bad you can’t post it anywhere on social media, because they would censor it… So, I’ll have to count on all of you to send it to as many people you can, so the word can spread… here’s the link: https://www.ft.com/content/196a59b8-e2fa-42f2-8d36-bb0beabc4b37 But here’s the problem… this article is behind the firewall at the FT… So, unless you have a subscription to the FT… Boy, oh Boy, the trials and tribulations I go through to get people information…
I have no idea no idea what’s to become of all this, but my inclination is to think that it’s all going to end up in tears…
We’ve already covered the U.S. Data Cupboard from Friday last week, above, so as I look at the calendar for this week, I see a lot of nothing… Some Housing reports, dominate the week, and then on Friday we’ll see the latest Leading Indicators report… That’s too bad, in my book, given the rot on the economy’s vine that keeps getting exposed and sending the dollar down, but not this week… So, the anti-dollar traders will have to find something else to move them to sell dollars further…
To recap… Chuck is beside himself as to how in the world can the U.S. print 3 awful economic reports on the same day, including Retail Sales for December, and the dollar rallies? So, that’s the gist of today’s opening, as Chuck goes through the negative or contracting reports on Friday, and then expresses his feelings that something is awry… There’s a damning article on the Fed in today’s Pfennig, and in the overnight markets last night, we saw more dollar buying, and Gold & Silver are on their heels early this morning… It should be a strange week, folks with no real economic data.
For What It’s Worth… Do you remember what things were like before Covid? If you do, then you’ll recall me screaming from the rooftops about the Fed’s Repo shenanigans that began in Sept , 2019… The folks at Wall Street On Parade have written 150 articles that are related to those repos, and one of them printed over the weekend, and it contains an interview with well-known economist, Michael Hudson, and I have cut out a piece of that interview, as Hudson answers the question: why was the Fed giving trillions of dollars to these large Wall Street banks. And why was there a liquidity crisis? That’s unexplained. Why did the Fed refuse to release the names of these banks? And was there a financial crisis before COVID that the U.S. government later was able to blame on COVID, but it was actually a financial crisis in the making?” Ok, got that? Economist, Michael Hudson’s answer is below, or it can be found here: Economist Michael Hudson Says the Fed “Broke the Law” with its Repo Loans to Wall Street Trading Houses (wallstreetonparade.com)
Or, here’s your snippet: ““There was actually no liquidity crisis whatsoever. And Pam Martens is very clear about that. She points out the reason that the regular newspapers don’t report it is the loans violated every element of the Dodd-Frank laws that were supposed to prevent the Fed from Well, what happened, apparently, was that while the Dodd-Frank Act was being rewritten by the Congress, Janet Yellen changed the wording around and she said, ‘Well, how do we define a general liquidity crisis?’ Well, it doesn’t mean what you and I mean by a liquidity crisis, meaning the whole economy is illiquid.
“She said, ‘If five banks need to borrow, then it’s a general liquidity crisis.’ Well, the problem, as she [Martens] points out, is it’s the same three big banks, again and again, and again and again.
“And these are not short-term loans. She [Martens] points out that they were 14-day loans; there were longer loans. And they were rolled over, not overnight loans, not day-to-day loans, not even week-to-week loans. But month after month, the Fed was pumping money into JP Morgan and Citibank and Goldman.
“But then she [Martens] points out that, or at least she told me, that these really weren’t Citibank and Morgan and Chase; it was to their trading affiliates. Now this is exactly what Dodd-Frank was supposed to prevent.
“Dodd-Frank was supposed to protect the depository institutions by trying to go a little bit to restore the Glass-Steagall Act that Clinton and the Obama thugs that came in to the Obama administration all got rid of. [Editor’s Note: We suspect, but can’t say for sure, that Hudson might be thinking about Robert Rubin when he says “Obama thugs.”]
“It was supposed to say, ‘OK, we’re not going to let banks have their trading facilities, the gambling facilities, on derivatives and just placing bets on the financial markets – we’re not supposed to help the banks out of these problems at all.’
“So I think the reason that the newspapers are going quiet on this is the Fed broke the law. And it wants to continue breaking the law.
“And that’s why these Wall Street banks fought so hard to get the current head of the Fed reappointed, [Jerome] Powell, because they know that he’s going to do what [Timothy] Geithner did under the Obama administration. He’s loyal to the New York City banks, and he’s willing to sacrifice the economy to help the banks.” making loans to particular banks that were not part of a liquidity crisis.”
Chuck again… I know, very long FWIW today, but… This stuff is important folks, It may not be coming back to bite us in the rear now, but someday…. And for the informed, like you dear Pfennig readers, it won’t be a surprise!
Market Prices 1/18/2022: American Style: A$ .7186, kiwi .6771, C$ .7986, euro 1.1385, sterling 1.3592, Swiss $1.0926, European Style: rand 15.4339, krone 8.7607, SEK 9.0594, forint 313.53, zloty 3.9745, koruna 21.4512, RUB 76.22, yen 114.69, sing 1.3496, HKD 7.7952, INR 74.52, China 6.3455, peso 20.37, BRL 5.5232, BBDXY 1,170.44, Dollar Index 95.41, Oil $85.01, 10-year 1.82%, Silver $23.04, Platinum $982.00, Palladium $1,988.00, Copper $4.40, and Gold… $1,814.70
That’s it for today… Well, all the NFL games went the way I thought they would go, except, the one last night, and I think I let my dislike for Stan Kroenke , the owner of the Rams to shade my judgement of the teams… The Chiefs won Saturday night, so they’re still alive in the playoffs. My wife and I sat out on our balcony last night to watch the full, wolf moon, rise out of the ocean… I just love it when the moon lights up the ocean at night… We had a cold front move through on Sunday, with a very ugly storm, and the temps dropped, so right now we’re experiencing our “winter”, with sunshine and 65 days… That’s 10 degrees below normal for this time of year, but the days are just perfect as far as I’m concerned! Well, Seals & Crofts take us to the finish line today with their song: We May Never Pass This Way Again… That was a HUGE song during my Senior year of High School… I hope you have a Tom Terrific Tuesday today, and Please Be Good To Yourself! Be Positive, Test Negative!
Chuck Butler