February 22, 2022
* Currencies and Silver rally in the overnight markets
* Chuck points out two demons in our past…
Good Day… And a Tom Terrific Tuesday to you! Well, I hope you have a nice Holiday weekend, for I sure did! The weather was grand and oh so nice… I was able to be outside most of the weekend, all day long, reading and relaxing. My fave Basketball teams didn’t fare too well this past weekend though, with both the Mizzou Tigers and Stl. U. Billikens losing… UGH! Our Blues won one and lost one, so it wasn’t a complete washout weekend for them. And the Olympics ended… The U.S. did OK in this Olympics, but could have done better, given a break or two, or having someone that was born here, and raised here, compete for the U.S…. But I digress… Melvin and the Blue Notes greet me this morning with their song: If You Don’t Know Me By Now…
With the markets in the U.S closed yesterday for the President’s Day Holiday; it was a good day for me to catch up on what’s going on around the world… And pretty much it’s the same everywhere… Soaring inflation, ZIRP interest rate policies, no economic growth, and Central Banks printing more currency than you can shake a stick at! So, after conducting my search for a country that could lead us out of this mess, I gave up… There are none… Well, I take that back, there are two that don’t fall into that category… Russia and Singapore… But Russia now has the problems of a country being the aggressor and Singapore is tied to China so much, that you forget it exists…
Just like there aren’t any “Great Communicators” any longer, like Ronald Reagan… But I guess I shouldn’t go down that road, for it will tick too many people off… if you’re a Reagan fan, then you’ll like this 5 minute video from Prager U, if not, just skip ahead: Ronald Reagan: The Great Communicator | PragerU
OK… Well with stocks closed down yesterday, and with the Big Casino Banks on Holiday, it was Gold’s turn to shine… But by not having the U.S. investors playing, Gold’s upside was limited to what the foreigners had going, which wasn’t much… Gold did gain $4 on the day, while Silver lost 1-cent… Gold closed yesterday at $1,904.40, and Silver closed at $24.02
Gold has found its way back to the $1,900… But it hasn’t really added to that figure in the past few trading sessions… It’s as if, someone is saying, Whew! We made it, now we need a breather!
In the overnight markets last night… The dollar has gotten sold a little bit, with the BBDXY falling to 1,174.14, and Gold has given back the $4 it gained yesterday. Silver on the other hand is up 11-cents this morning in the early trading. The price of Oil has leaped higher by over $3 in the past 24 hours, on the news that Russia may have entered Ukraine… The U.K. issued a statement that the invasion had begun, but the leader of Ukraine, said, “not yet”… Either way, it’s not a good thing, folks…
And certainly not for the Russian ruble, which if we go back to the first invasion of Ukraine, we see that the ruble was trading around 36 pre-conflict, and then dropped by a wide margin… I sure hope that this conflict doesn’t bring about the same damage to the currency, that has never recovered the lost ground from the last conflict.
I’ve been reading a book that goes back to the beginning of the Financial Meltdown we had 15 years ago, that started in 2007, with the collapse and then subsequent saving by JP Morgan and the Gov’t, of Bear Stearns… This book goes blow by blow of every meeting that was held and so on discussing the lack of regulation, the lack of forward looking by the Fed, and so on… You may recall the Fed saying that the economy was strong, and then Treasury Sec. Tim Geithner saying the same bunch of B.S. And it reminded me of what’s going on now…
The Fed/ Cabal/ Cartel continued until a meeting ago to tell the public that the economy was good, and that we shouldn’t be concerning ourselves about the inflation that we saw rising because it was only transitory… They kept telling us that over and over again, and at one point you had to wonder, “Where they really that stupid, or where they born liars” …
I guess we’ll see at the end of this week when the Fed/ Cabal/ Cartel’s preferred method of looking at inflation, the PCE (Personal consumption expenditures) and this is what Bloomberg.com had to say about that: “Federal Reserve Chair Jerome Powell and his colleagues in the coming week can expect to see their key inflation metric accelerate to a fresh four-decade high last seen when Paul Volcker led the U.S. central bank.
The personal consumption expenditures price index, which the Fed uses for its inflation target, probably jumped 6% in January from a year earlier, according to the median of a Bloomberg survey of economists. The core measure, which excludes food and fuel, is forecast to climb 5.2%.”
Go figure, right? Our Central Bank uses the worst method to use as their inflation guide… But even the worst method is still going to show strong inflation in the economy…
You know there have been some real demons in the history of this country… Woodrow Wilson would be right up there, but another person that would be right up near the top would be Larry Summers… Longtime readers will remember me complaining about Summers many times in the past… In recent times, he’s faded into the background… But when it came time to have someone champion the idea of removing Glass-Steagall, there was Summers… And when it came time to decide whether the derivatives got regulated, there was Summers saying they shouldn’t…
I used to yell at the walls that when POTUS Obama picked Tim (Turbo Tax) Geithner and Larry Summers as his Treasury Dept heads… Why did this bother me? Because, what the POTUS had done was select two men whose actions had contributed to the financial meltdown that they were now supposed to figure out a how to solve it… But I don’t want to go further here today, for this discussion could go on forever!
Our current situation is brought on by the Gov’t and the Fed/ Cabal / Cartel, and that is inflation, but it’s more than that… They’ve fueled an “everything bubble”, of which will come crashing down on all that think these things go on forever… And when all these crazy ideas like NFT’s, and cryptos, and SPACs, and stocks that have unsustainable price to earnings numbers, come crashing down hard, it will be Gold that’s left standing… Want an alternative to Gold…. Ok… how about Silver?
Oh, and don’t forget the stupid mandates in California… Want to know why there’s a backup of ships in the Los Angeles harbor? Well… the truck drivers don’t believe in vaccines…. So, California has a vaccine mandate that won’t allow the trucks driven by the unvaxed to come into the shipyard… So, the cargo sits on the dock, and there’s no removal of it, well none when comparted to the way things used to work. So, why bring a ship to the dock if they have nowhere to unload their cargo, because the last ship’s cargo is still on the dock?
Unintended Consequences… Just like Summers thinking that dropping Glass-Steagall was a good idea, only to find out years later that the Banks had become Casino Banks that were Too Big to Fail… Just like Ben Bernanke thinking that bond buying was a good idea, only to find out years later that all it did was benefit the rich, and not anyone else…
OK, there’s got to be something else to talk about today…
No? Ok then let’s go to the Data Cupboard… Well, today’s Data Cupboard has the Case/ Shiller Home Price Index from Dec… And then we’ll see some housing stuff, that doesn’t move the markets, and finally we’ll see the stupid Consumer Confidence Index… Which you may recall the previous month’s print showed a huge decline… Not as much as Chuck would have marked it down, but a decline nonetheless…
Tomorrow’s Data Cupboard is bare… And then on Thursday, there’s not much, but Friday’s cupboard is chock-full-o-data, with the Personal Income and Spending reports, the PCE that I talked about earlier, disposable income, and many more prints…
To recap… The markets were closed in the U.S. yesterday, but Gold traded, and found a way to gain $4 on the day… Chuck goes off on a couple of tangents today and comparisons, that will make your head spin… Well, maybe… The U.S. Data Cupboard is chock-full-o-data this week, but takes Wednesday off… And Chuck points out two demons in our past, that should be at the top of anyone’s demon list…
For What it’s Worth… When I mentioned above that globally almost all Central Banks and countries are in the same boat as the U.S. I left out the two countries, Russia & Singapore have strong Central Banks… And that brings us to the today’s FWIW which is an article about how Central Banks have become insolvent, and it can be found here: Central banks are now insolvent (goldmoney.com)
Or, here’s your snippet: “There is a widespread assumption that commercial banks bear risk while central banks bear none. Folding notes are superior to bank deposits for this reason. It is commercial banks which fail, and central banks that rescue the ones worth rescuing. They are the lenders of last resort.
As such, their financial integrity goes unquestioned. Of course, we do not usually include central banks in emerging nations in this statement, but any risk is always perceived to be in their currencies rather than the institution. We know that the Reserve Bank of Zimbabwe can and does run some unconventional monetary policies, but you won’t hear the RBZ’s survival being questioned. It is generally assumed that in any nation a central bank that can issue its currency in unlimited quantities can never go bust, and that is why it is the currency that fails, and not the institution.
Consequently, commercial banks come and go, but like ol’ man river central banks just keep rolling along. At least, that appears to be the experience. But until recent decades, history has not seen major central banks routinely investing large amounts in their national bond markets, because any respectable central bank has always shied away from overtly inflationary financing of its government’s deficits.
That changed in 2000, when the Bank of Japan was the first to introduce quantitative easing. Reassured by the unexpected price stability following the BOJ’s asset monetisation, QE was only introduced by the other major central banks in the wake of the financial crisis which led to the failure of Lehman. And after that precedent was created, QE has become a permanent feature of monetary policy, investing in longer maturity bonds than the commercial banks, which usually confine their maturities to less than five years.
According to the central banking establishment, QE is an unconventional policy tool which is only deployed when interest rates have been reduced to extremely low levels. If the rate of price inflation is still below the mandated 2% target, and aggregate output is deemed to be below potential, QE is then deployed. And there is the Taylor rule, which posits that a central bank should lower interest rates when inflation is stubbornly below the target level of 2%, or when GDP growth is too slow and below its potential, even if it implies negative rates. QE is then justified as the alternative or in addition to this unnatural condition.
The result has been an explosion in the size of central bank balance sheets. The combined balance sheet total of the Fed, ECB, BOJ and Peoples Bank of China rose from $5 trillion in 2007 to $31 trillion at end-December — more than sixfold.[i] It is an increase which has driven the bubble in financial assets, the link being through the suppression of government bond yields from such massive market intervention through money printing.”
Chuck again… Whew! that was a very long snippet today! This article goes on further and really only takes shape when you click on the link above and read the whole article…
Market Prices 2/22/2022: American Style: A$ .7223, kiwi .6742, C$ .7860, euro 1.1355, sterling 1.3560, Swiss $1.0888, European Style: rand 15.0992, krone 8.8918, SEK 9.3275, forint 313.31, zloty 3.9995, koruna 21.5678, RUB 79.23, yen 115.06, sing 1.3458, HKD 7.8018, INR 74.67, China 6.3282, peso 20.29, BRL 5.0825, BBDXY 1,174.14, Dollar Index 95.92, Oil $94.10, 10-year 1.93%, Silver $24.13, Platinum $1,092.00, Palladium $2,474.00, Copper $4.50, and Gold… $1,900.20
That’s it for today… Only one more week of February to go, and then we’re into March! Which has always been one of my fave months, because of Spring Training… and the beginning of Spring… And my birthday… But this year, we may or may not have spring training games while I’m here… the beginning of Spring is no biggie to me any longer now that I spend my winters in S. Florida, and well, I can take or leave my birthday, other than this will mark the 15 years since I first felt the pain in my right hip / femur area and didn’t think too much of it… Those darn spots on my bald head have returned, so that means I have to start putting that magic lotion on my head again… UGH! I guess that’s better than having to have them burned off, or cut on… The Baseball players and owners are meeting in Jupiter Fla, just up the road from me here, in an attempt to save the baseball season… Shouldn’t these talks have happened weeks ago? Oh well, I’m signed up for season tickets to the new MLS team we’ll have in St. Louis that begins play next year. I need them to be playing this year, while baseball is still being babies! Earth, Wind and Fire take us to the finish line today with their song: After The Love Is Gone…. I hope you have a Tom Terrific Tuesday today, and Please Be Good To Yourself! Be Positive, Test Negative!
Chuck butler