February 23, 2023
* dollar buying continues in the overnight markets
* Fears of higher rates sends Oil to the woodshed…
Good Day… And a Tub Thumpin’ Thursday to one and all… Well, we’re just a couple of weeks away from my spring vacation, and I’m sure you will miss me dearly each and every day that I am away… HA! As if! No games last night for my teams, means no one lost! It’s been that way lately for my teams, the Mizzou Tigers, SLU Billikens, and the Blues… Soon, the Cardinals will be in the mix, but not for another month. (sprig training games are not real games, but I love them nonetheless) Had a great Greek dinner last night with my buddy, Gus, who also had his two grand daughters with him… I had never had anything Greek, other than spinach pie, gyros, and a Greek salad… The food was awesome, the ambiance was real Greek, and everyone had a grand time! Toad The Wet Sprocket greets me this morning with their song: Walk On The Water… (that’s a great 90’s song, and if you don’t know it, YouTube it)
When I left you yesterday morning, the dollar was still getting bought… But Gold was up in the early trading… Well, all that as the day went along… The dollar ended up down on the day, and Gold did too… The BBDXY lost 1 index point on the day, so no great shakes in the selling of the dollar, and Gold saw price manipulation, BIG TIME, and ended up losing $8.70 on the day to close at $1,826.80, and Silver lost 34-cents, to close the day at $21.59…
The price of Oil slipped another buck yesterday to end the day trading with a $74 handle… This Oil price confuses me more than anything… But we’ll leave this for another day to discuss… The 10-year’s yield dropped a bit at ended the day with a 3.92% yield…
The Big News yesterday, was the FOMC Minutes, which showed that quite a few Fed Heads wanted/ favored a 50 BASIS POINTS rate hike but had to settle with a 25 BPS rate hike… That really got the price manipulators revved up, for they saw the news as an opportunity to show up at the COMEX window with arms full of short Gold / Silver contracts…. My question would be… If the Fed Heads were in favor of a 50 BPS rate hike, why then did the rate hike only come in a 25 BPS?
I think I know the answer to that question, but if I tell you, it will sound like I’m saying the Fed Heads want the U.S. economy to deal with inflation longer… I know that sounds a little far fetched, but… think about it, and remember what I’ve told you in the past, that the U.S. wants inflation to lessen the effects of their debt… if you can turn a $20 debt, into a debt worth just $5… You’ve done yourself a BIG FAVOR! Never mind the fact that citizens having to deal with this inflation is falling to their knees…
In the overnight markets last night… The markets didn’t move much at all, with the BBDXY gaining one index point, Gold is flat this morning, and everything else seems to be in state of shock… Silver is flat to start the day, and the price of Oil slipped another buck, and trades this morning with a $74 handle… Bond traders saw the wording of the FOMC Minutes, and got to marking down bonds once again, which means the price of the bond goes down, and the yield goes higher…
I think the tech people are working on a “work around” for replying to the Pfennig… If you see something different, just follow the instructions, and your response will end up in the Pfennig Replies box…
That public service announcement was brought to you by the good Folks at the Aden Forecast, who are the publishers of this letter!
The carry trade that I talked about yesterday, was in play yesterday, just from the looks of the price of yen faltering, and the price of kiwi, and peso, gaining… I’m sure there are other currencies that the investors using the Carry Trade are looking to buy… But those two are the highest yielding currencies in the major currency world…
I found this on Bloomberg.com… “The value of the US housing market shrunk by the most since the 2008 as the pandemic boom fizzled out.
After peaking at $47.7 trillion in June, the total value of US homes declined by $2.3 trillion, or 4.9%, in the second half of 2022, according to real estate brokerage Redfin. That’s the largest drop in percentage terms since the 2008 housing crisis, when home values slumped by 5.8% from June to December.”
Chuck… I guess you would have been living under a rock, or not reading the Pfennig to not know that the rate hikes by the FOMC would lead to House prices falling… I told you in this letter, what would happen… I do have to say that while the rest of the country is seeing home prices falling, here in Florida, that’s not happening.. There’s been a slew of New Yorkers, New Jersey, and other high tax North East states, seeing their constituents move to Florida… Just a country bumpkin’s illustration of this, is Traffic down here is crazy! Unlike the previous years!
Those crazy North Easteners, are buying whatever they can find, at whatever the seller wants to sell it for… And rents? OMG, the rents people are paying for Florida condos, apartments, etc. The rents are moon shots! Crazy/ silly money, chasing few opportunities…
I found this on Fox News: “U.S. household debt jumped to the highest level since the 2008 financial crisis last year as mortgages surged amid high inflation and rising interest rates, according to a new analysis published by WalletHub.
The findings show that household debt – which increased by $320 billion in the final three months of 2022 – hit a 15-year-high of $17 trillion. On average, a typical household owed a total of $142,680 at the end of the year.”
Chuck again.. Building debt to astronomical levels.. and hoping for a bailout… That’s what I see going on here… and why not? The Gov’t is paying for Student Loans that were astronomical in size, why not bail out credit cards, home loans, car loans, etc? I think these folks will be waiting a long time before they get bailed out… So, the next step for them is to file for bankruptcy… I’m just saying…
When the U.S. Consumer gets tapped out, the U.S. economy goes south… And what is supposed to pick up the slack of weak Consumer spending? Well, according to the Keynesians, the Gov’t should step in at this time… But if the Gov’t steps in this time, they will be creating more inflation ….
And Fortune.com said this: Americans are racking up debt and burning through their savings—economists warn it could spark a recession…
Inflate or die…
Or… Got Gold?
And to add salt to the wound this morning, how about this ditty that I read about? … While the unemployment rate sits at its lowest level in decades, cracks are beginning to form in the subprime auto loan market.
According to Moody’s, some 9.3% of auto loans extended to people with low credit scores are at least 30 days late, the highest since 2010, the WSJ reports.
Boy, I’m full of seashells and balloons this morning, ain’t I? hey, here’s some sunshine for us before we head to the Big Finish this morning… The Sun is rising out of the ocean, it’s a beautiful sight… Ahhh….
The U.S. Data Cupboard yesterday, had the FOMC Meeting Minutes, and they sounded a bit like this… “FOMC Minutes Suggest Fed Fears Financial Conditions Decoupling, Warns About High Equity Valuations”, and that was in contrast to what FOMC chairman Powell said in his press conference following the meeting… So, now the markets are really confused! What to go Jay.. you’ve done your job! You’ve confused the markets so they don’t’ know which way is up, down, around, or still…
The U.S. Data Cupboard today has the usual fare for a Tub Thumpin’ Thursday, in the weekly Initial Jobless claims… In addition the first revision to 4th QTR GDP will print, and then we have two Fed Heads scheduled to speak… And that’s allllllll folks… in my best porky pig voice…
To recap… The dollar buying stopped for a brief rest yesterday, and the early morning gains in the dollar index turned negative by one index point to end the day. The FOMC Meeting Minutes showed the Fed Heads preferring a 50 Basis Point hike, instead of the 25 BPS rate hike delivered at that time… Chuck questions the Fed Heads’ collective sanity… In addition, Jerome Powell confused the markets with his comments… nothing new here… Remember Fed Speak, from Big Al Greenspan? Chuck is Mr. negative with regards to the U.S. economics… so you’ve got that going for you this morning!
For What It’s Worth… In keeping with my negativity for today, this article I found this past weekend, and then forgot I had it queued up for a FWIW article, until yesterday… So, here it is.. this is about what I’ve been telling you for sometime now, about how the rest of the world is giving up on holding dollars, and it can be found here: Half the world to dump U.S. dollars in future, causing ‘tsunami of inflation’ and asset price ‘collapse’, paving the way for CBDCs and The Great Reset – Andy Schectman | Kitco News
Or, here’s your snippet: “As the world moves away from the U.S. dollar as a world reserve asset, dollars will be dumped globally, causing a “tsunami of inflation” in the United States as the currency returns to American shores. Interest rates will rise accordingly, followed by a “collapse” in asset prices, which would be used to usher in Central Bank Digital Currencies (CBDCs) and The Great Reset.
This dire scenario is the forecast of Andy Schectman, President and Owner of Miles Franklin and an expert on monetary and economic history. Schectman, who has three decades of experience in the precious metals sector, said that the BRICS (Brazil, Russia, India, China, and South Africa) coalition could lead the charge to develop their own reserve currency which would compete against the U.S. dollar.
“The BRICS are, I think, coalescing against the dollar, the perceived hypocrisy and hegemony of the dollar,” he said. “We’ve already been told that the BRICS currency would be pegged to gold or to commodities, the assumption being that gold is one of the commodities.”
The BRICS are meeting in Durban, South Africa in August, and one of their agenda items is the development of an alternative to the U.S. dollar.
Schectman told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, that the dollar’s “weaponization” during the Russian war with Ukraine has hastened the move to “dump” dollars. He suggested that Western sanctions on Russia, as well as expelling Russia from the SWIFT payment system, has had a chilling effect, deterring other nations from using the dollar.
“Since the weaponization of the dollar in 2022, it [de-dollarization] seems to be spinning much, much faster,” Schectman observed.
He pointed to Saudi Arabia, who has recently stated that it is open to accepting other currencies in exchange for its oil, as a potential catalyst for massive de-dollarization.”
Chuck Again… makes you wonder why there’s so much dollar buying right now, doesn’t it? Oh well, when the time comes, the dollar bugs will be sorry… I’m just saying…
Market Prices 2/23/2023: American Style: A$ .6830, kiwi .6237, C$ .7393, euro 1.0605, sterling 1.2035, Swiss $1.0729, European Style: rand 18.3382, krone 10.3271, SEK 10.4299, forint 359.80, zloty 4.4772, koruna 22.3410, RUB 75.19, yen 134.94, sing 1.3425, HKD 7.8465, INR 82.74, China 6.8982, peso 18.31, BRL 5.1463, BBDXY 1,247.87, Dollar Index 104.55, Oil $74.78, 10-year 3.94%, Silver $21.60, Platinum $959.00, Palladium $1,476.00, Copper $4.11, and Gold…. $1,826.05
That’s it for today… and this week… As of today, I’ll be all by myself for the next 4 days, until my Spring Training Buddies, (Rick and Duane) arrive… No worries, I have my iWatch on, which will notify the proper people if I fall… I actually like it being along at first, and then after a few days, I long for companionship again… I have two new books to read to keep me busy, and my door dash account is active! HA! My buddy Gus’s granddaughters are darling: Ava and Stella… and they are darling taking care of their grandpa… Gus is from Greece, so he had to explain the items on the Greek menu last night to me and Kathy… At one time we had more food on our table than I had ever seen on a table before! Pink Floyd takes us to the finish line today with their song: Hey You! “Hey you, out there in the cold,Getting lonely, getting old, Can you feel me?” yeah, that song… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and please, please, with sugar on top, Be Good To Yourself!
Chuck Butler