February 8, 2022
*Currencies & metals rally on Monday
* The Myth of a soft landing…
Good Day… And a Tom Terrific Tuesday to you! Day 2 of being all alone again, and still no one complaining about the stove! HA! It was another beautiful day here, well at least for most of the day, before the clouds rolled in. It’s been the weather pattern lately, with nice warm sun for the first part of the day, and clouds the second part of the day… So… as always, the early bird gets the worm! And that’s where I shine! I’m a morning person, always have been… When we first started EverBank, I would get up at 3:30 am and be at my desk by 4:430 am… And then 13 hours later, I might be ready to go home… I ate dinner at my desk many a time… But it was all worth it, as I sit here in S. Florida, watching the sun rise over the ocean! The Great Leon Russell greets me this morning with his song: A Song For You…
Well… yesterday was a good day for the currencies… The dollar started the day at 1,176.04 in the BBDXY and ended the day at 1,174.06… The Aussie dollar was the best performing currency of the day, after it was reported that the Reserve Bank of Australia (RBA) is prepared to hike rates in June… The RBA has already announced an end to their bond buying… So, even more proof that we’re nearing an end of easy money…
So… in a recap of the markets yesterday that I follow, the currencies rallied, with the dollar losing ground all day… But we have to be realistic here… The dollar loses ground all the time, only to recover the next day or a day or two later… I’ve explained this many times in the past, but will go through it again here… The powers that be in this country have no problem pushing the value of the dollar down, they say to increase exports, but in reality, they want a weaker dollar to invite inflation into the country, they need inflation to eat away at their debts… But… they will not allow the dollar to fall off a cliff… Slow and steady wins the race, as the tortoise said!
Gold gained $11.90 yesterday to close the day at $1.821.30, and Silver gained 50-cents to close at $23.10… The price of Oil bumped a little higher, and moved back above the $91 handle. Bonds saw just a 1 BPS move higher in the 10-year yesterday…
Speaking of Oil… the Texas Tea, has climbed to levels not seen in Oil since 2014, and then it was falling back from being over $100… And like I showed yesterday the price has increased 30% from a year ago… And once again I’ll point out that the stupid BLS says consumer inflation is 7.3%, and the Fed/ Cabal/ Cartel aren’t going to do anything about it, until next month… And then it will only be 25 BPS rate hike, with the promise to hike more in the future, and they truly believe that they will slay the inflation dragon…
You see… When Fed/ Cabal/ Cartel chairman, Jerome Powell, said that the FOMC would bring inflation down and allow for a soft landing, this is where I say hogwash! The mention of a soft landing is a key to how they will hike rates, folks… 1/4% or 25 BPS at a time, so that they can stop at any time, or keep adding bit by bit…
In the overnight markets last night…. Well, it didn’t even take one full day of trading for the dollar to get back on the rally tracks… The dollar was bought in the overnight markets, and this morning the BBDXY trades at 1,175.73, after closing yesterday at 1,174.06… The A$’s climb that was the best performance in the currencies yesterday, was chopped back, and all the currencies are reeling this morning.
Gold is down $2.50 in the early trading today, and Silver is down 15-cents, to bring Silver back below $23.00… Oil price has slipped lower and trades with a $90 handle this morning, while bonds are still stuck in the mud..
I told you last week that BOA has forecast that the Fed/ Cabal/ Cartel will hike rates at 7 consecutive meetings thus brining their Fed Funds Rate to 3%… And that would be impressive, but still leaving U.S. rates in negative territory when taking in inflation…
I’ll bet you a shiny quarter that the FOMC doesn’t get to 7 in rate hikes… I just don’t see them getting past 4 rate hikes… At that point, the Fed Funds Rate would be just over 1%, and the stock jockeys won’t like it one bit…
In reading the book “The Lord of Easy Money”, I’ve learned that Jerome Powell, the Fed/ Cabal/ Cartel Chairman, was anti- QE when he was a FOMC Gov. Really? I hear you saying… Yes… I was talking with good friend, Dennis Miller, again yesterday, and I said, “Powell is not a dummy, he’s very smart, and he knows that the Fed/ Cabal/ Cartel’s policies have pushed investors/ savers into risky investments, but… he must be getting his marching orders from outside the Fed/ Cabal/ Cartel…
But at some point, someone has to be the adult in the FOMC Meeting Room… And stand up for what you believe, and not just go status quo…
In reading the book mentioned above, I found it very interesting that all the Fed’s men and all the Fed’s horses couldn’t figure out why the economy remained stagnant during their QE problems… Really? It was something that I kept harping about in Pfennig after Pfennig, that when the debt gets so large, that all the efforts go toward servicing the debt, and dealing with it, instead of putting funds to work in the economy… All they had to do is read a Pfennig, or email me, or call me I would have shared my view with these confused propeller heads that the Fed/ Cabal/ Cartel employs…
So, when will the Bank of Canada (BOC) get off their duffs and hike rates? Well, they’ve got a ton of problems in the land to the north, A housing bubble, rising inflation, a ton of debt, (is this all sounding familiar? ) and the list goes on… But in the end, I do believe that the BOC will look to hike rates once the Fed/ Cabal/ Cartel gets going… And then, with the price of Oil giving the Canadian dollar/ loonie all the support right now, I would think that a rate hike or two would push the loonie back to previous highs… But then I’ve always like the loonie, and I only want what’s best for the currency.
Yesterday, I talked briefly about how I had been waiting for the regular people, like me, to rise up and point out the stupidity of Gov’t demands, and then right after I hit “send” on the letter I saw this quote from someone I admire… Here it is: “We have the greatest opportunity the world has ever seen, as long as we remain honest — which will be as long as we can keep the attention of our people alive. If they once become inattentive to public affairs, you and I, and Congress and Assemblies, judges and governors would all become wolves.” – — Thomas Jefferson
I truly admire Thomas Jefferson… And his position on Central Banking… It’s too bad there aren’t any Thomas Jeffersons in Congress these days, eh? Remember what then President John Kennedy said about him, “I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered at the White House – with the possible exception of when Thomas Jefferson dined alone.”
And in something that took me by surprise I read this article yesterday that I’ll share with you in the FWIW section today, but before then, I have this to share with you… When inflation soars, so too do commodities, historically that is… And while past performance has nothing to do with future performance, I would have to say that Commodities are in demand right now… And that will be a boon to the countries that produce the commodities… And so I’m going to give you an idea to look at… Long ago when I was at EverBank, I created a basket CD titled: The Commodity CD, which took in the currencies from the following Commodity producing countries: Australia, New Zealand, Canada and South Africa… I do believe they still offer that CD, or have tweaked it a bit…
This is how you can take advantage of rising inflation, and commodities rallying …. I suggest you call the folks at 1-800-926-4922, and tell them I told you to call them… ( full disclosure: I do NOT receive any money from TIAA for recommending this CD)
As I told you yesterday, the U.S. Data Cupboard won’t be in play until Thursday this week. Today’s offering is the Small Business Index, which isn’t exactly a real economic print…
To recap… The currencies turned around the dollar buying in the U.S. session yesterday, and ended the day, and the BBDXY closed down on the day. Gold gained nearly $12 on the day, and Silver gained 50-cents, to move back above $23… Chuck points out that the Jerome Powell was one a FOMC Gov. and was anti-QE!!!! Chuck also pays homage to Thomas Jefferson and wishes we could find another one in Congress today! And in the overnight markets the currencies and metals have given back some of their gains from yesterday… Chuck just shakes his head, and wonders…
For What It’s Worth…. Ok, I gave you a hint above of what I’m putting up for today’s FWIW article, this is JP Morgan saying that they can’t find commodities, that they are all spoken for, and that article can be found here: Goldman Commodity Veteran Says He’s Never Seen a Market Like It (yahoo.com)
Or, here’s your snippet: “Jeff Currie, the closely-followed head of commodities research at Goldman Sachs Group Inc., says he’s never seen commodity markets pricing in the shortages they are right now.
“I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said in a Bloomberg TV interview. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
Futures curves in several markets are trading in super-backwardation — a structure that indicates traders are paying bumper premiums for immediate supply. The downward sloping shape in prices is generally taken to mean commodities are severely undersupplied.
The Bloomberg Commodity Spot Index, which tracks 23 energy, metals and crop futures, has touched a record this year. That has been driven in part by surging oil prices, which have hit their highest level since 2014.
Top Commodities ETF Reaps Record $1.1 Billion as Markets Soar
Diesel futures are in their strongest backwardation since 2008, excluding expiry days, according to data compiled by Bloomberg, while the structure of the crude market has also been booming in recent days. All six of the main industrial metals traded on the London Metal Exchange moved into backwardation late last year, in a rare synchronized bout of tightness last seen in 2007.”
Chuck again… Once again, historically, commodities do well in inflationary times… And they will become scarce and that will drive their prices even higher…
Market Prices 2/8/2022: American Style: A$ .7130, kiwi .6642, C$ .7886, euro 1.1405, sterling 1.3547, Swiss $1.0828, European Style: rand 15.4960, krone 8.7843, SEK 9.1298, forint 309.84, zloty 3.9708, koruna 21.2237, RUB 75.35, yen 115.35, sing 1.3445, HKD 7.7951, INR 74.71, China 6.3671, peso 20.62, BRL 5.2559, BBDXY 1,175.73, Dollar Index 95.61, Oil $90.87, 10-year 1.93%, Silver $22.95, Platinum $1,016.00, Palladium $2,319.00, Copper $4.43, and Gold… $1,818.80
That’s it for today… Well, it was a good night for the U.S. skiing team last night, as a Silver medal was won by the U.S. male skier in Super G… I don’t really like much of the Winter Olympics other than the curling, and hockey, but I will watch the downhill skiing… Kathy’s not here to watch the figure skating, so that means I don’t have to watch it! My Billikens are on the road again tonight, and play LaSalle… Go Billikens! And this marks two days in a row that the great group: The Marshall Tucker Band take us to the finish line, today, with their song: Searchin’ For A Rainbow… I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself! Be Positive, Test Negative!
Chuck Butler