June 14, 2023
* currencies & metals rally in the past 24 hours
* Inflation cools, but did it really?
Good Day… And a Wonderful Wednesday to you! Another ugly night at the ballpark for St. Louis Cardinals fans last night… Their games have gotten to the point that I havre no patience for them… And I’ve been a lifelong fan even during the 90’s when the team was this bad then… Maybe they’ll find a silver lining soon, but they had better or else the fans will not show up for games… And that’s the best message that fans can give to the management of a team…. I made smashed burgers on my Blackstone griddle last night, yummy! Day game today at Busch Stadium, and I’m going to the game with my son Andrew! Maybe us going can bring home a winner…. Today is Flag Day! Fly your Flags proudly! The Scorpions greet me this morning with their rockin’ song: No One Like You
Well… The dollar was traded yesterday, and didn’t have much movement for the reason I gave the previous two days… The dollar did lose one index point in the BBDXY, no biggie… The euro was kept from reaching 1.08, but still remained within’ spittin’ distance of the 1.08 figure at the end of the day yesterday. So, today is the day, that eveyone has been waiting for, the FOMC announcement, which will come this afternoon… At that time we’ll find out whether the Fed Heads were truly in the fight to defeat inflation, or if they were just faking it…
Gold saw a lot of engineering yesterday, and ended down $14.20, to close at $1,944.30, Silver too, saw engineering and watched it’s price lose 42-cents on the day, to close at $23.73… Here’s what I believe the short paper traders had in mind yesterday… I believe they know ahead of time that the Fed Heads are going to pause, and that news could trigger a huge buying spree in the metals, so they took them down yesterday, so that the beginning point is lower and Gold & Silver will have to work harder tomorrow just to get back to where they were a day ago… That’s how I see it, and you can argue with me all day long if you want, but I’m not changing my mind on this, it’s how I see it happening…
The price of Oil bumped higher by another buck in the past 24 hours, and ended the day trading with a $69 handle, while bonds got sold because at this point, I think everyone knows what the Fed Heads are going to do. The yield on the 10-year rose to 3.80% yesterday…
In the overnight markets last night…. There was more dollar selling, with the euro finally climbing over the 1.08 figure, and the BBDXY losing 2 index points. This has to be more proof that the fix is in today… Why else would traders take positions ahead of the FOMC without knowing what the FOMC would have to say? All the currencies have gained vs the dollar sans the Russian ruble… Gold is up $3 to start today, and Silver is up 4-cents to start the day… This should be the Wild, Wild West in the markets today, so strap yourself in, and keep your arms and legs inside the vehicle at all times! The price of Oil bumped higher again and has added $3 in the past 3 days this week, and trades this morning with a $70 handle…
So, now we wait on the FOMC… But I have to say that if this dollar selling continues throughout the morning ahead of the FOMC Announcement, you can be assured that the Fix was in, and everyone that is anyone was alerted ahead of time… I find that to be sneaky, and should be unlawful… But then that’s just me…
A good friend of mine, Carl Moore, sent me a text yesterday from the Twitter account of Wall Street Silver…. Here’s what Janet Yellen is quoted to have said yesterday, “We Should expect Slow decline in dollar as Reserve Currency”… Now if Janet Yellen is saying that out loud, and admitting it, then things are really bad, don’t you think? Thank you Carl, for sending that to me!
Yesterday, I told you that the fix was in, on what the stupid CPI would print, and right there before my eye, the stupid CPI printed a .1% gain in inflation in May, with the year-on-year rate remaining at 4.0%… To all that I call B.S.! But it it what it is, and so the fix is in for the Fed Heads to point to how inflation seems to be under control, and that’ s the reason they will use to pause and not hike rates further… I shake my head in disgust here, because if I can see that this is what happened, the Big Boys should be able to see it too, because they all went to Ivy League schools and have MBA’s in economics and business! Or… maybe they can’t find their rear-ends with both hands… I’m just saying…
The good folks at GATA sent me this yesterday…. “North Carolina House Republicans want the state to use some of its savings to buy gold bullion and bury it in Texas.
A group of House Republicans filed a bill in mid-April that would have the state use $2 billion from its savings reserve to buy gold bullion.”
Chuck again… cool beans on that, if it passes, of course! But $2 Billion in Gold buys would certainly offset the short paper traders shenanigans, for a while that is…
long time friend, and associate in a former life, the publishing guru, and best selling author, Bill Bonner, was writing about how life was in the 50’s and 60’s yesterday, his whole article can be found here: American Values, Revisited – by Bill Bonner (substack.com)
I agree with him that the 60’s seemed like there was hope for many things… Here’s an snippet of Bills’ letter: “Those heady, glory years were a time of great hope and faith. The federal government had won WWII and demonstrated the atomic bomb; it could do almost anything, even put a man on the moon. The best and brightest of America’s young people longed for ‘public service.’
Today, we realize that the feds can do much less than we thought. They could put a man on the moon…but when they tried to stop communists in Vietnam, or drug dealers at home, they failed miserably. Nor could they boost the economy with their new, post-1971, gold-free money.”
I included this piece in today’s letter because I simply love Bill’s writings, and when he points out the things that I’ve talked about for years, it only gives me a huge charge! Yes, many years ago in a Sunday Pfennig, I wrote about Chuck’s Debt Solutions, and talked about how the U.S. needed to stop all wars… Including the war on drugs, war on poverty, ware in the Middle East, etc. and close all our bases around the world, bring the military home to protect our border… Those things won’t solve the debt problem, but they will make a huge dent in the deficit spending each year!
Yes, those Sunday Pfennigs were something special, as they were written by a group of people including myself, Chris Gaffney, Mike Meyer, and Frank Trotter… In the end though, it seemed like every week, the marketing people would call me on the phone and tell me they needed me to write something for the coming Sunday… I finally balked, and that was the end of the Sunday Pfennigs…
OK, back to the markets… The rest of the world is still in their rate hike cycles, even the Reserve Bank of Australia (RBA) has come back to the rate hike table after stepping away for a couple of months… In the days of fundamentals this would all be a bad thing for the dollar, but in today’s world of trader sentitment ruling the trading, these things get put on the back burner… But will they this time too? My spider sense is tingling, and letting me know that this time when the Fed / Cabal/ Cartel hold rates steady, while the rest of the world is hiking them won’t be pretty for the dollar…
The U.S. Data Cupboard yesterday, has the aforementioned stupid CPI… And today well see the May print of Producer Prices (wholesale inflation) Tomorrow we’ll see the color of the May Retail Sales, which the BHI indicates to me that it will disappointing once again…
To recap… The dollar barely moved yesterday for the reason Chuck talked about yesterday and Monday. Gold saw another engineered takedown ahead of the FOMC annoucnement, which leads Chuck to believe that the short paper traders were told ahead of time what the Fed Heads will do today, and they proceeded to get Gold a lower starting point… Dirty deeds, done dirt cheap! (AC/DC) Janet Yellen admits that the dollar’s day as the Reserve Currency is numbered, and Chuck talks about Sunday Pfennigs… You’ve gotta love when he reminces about his past like at EverBank…
For What It’s Worth… Well, since yesterday was STUPID CPI Day, I thought a good discussion on how stupid the data is would be appropriate, and long time friend, Addison Wiggin, filled the bill… Addison doesn’t spend all day writing a letter like I have been known to do… his knowledge and aquaintances through the years, have given him a lef up on the rest of us lowly letter writers… So, this is Addison talking about inflation and it can be found here: The Daily Missive from The Wiggin Sessions
Or, here’s your snippet:” Addison starts his letter today, off with this quote: ““A nation that encourages its people to spend more and save less promotes economic backwardness, social decay and its own financial doom.”
– Kurt Richebacher
And now he begns to talk: “When the CPI numbers came out this morning, they showed inflation had slowed again to roughly 4% year-over-year. The data prompted even more pundits to forecast the Fed will announce a pause in interest rate hikes tomorrow.
I was pressed on a podcast last night from Melbourne about what I thought the Fed would do. I answered that it doesn’t really matter what I think because they’re going to do. It stands to reason, I can only share my opinion.
The Fed should raise another quarter point to show they’re resolute in fighting inflation, even if it’s only to get back to their arbitrary target of 2%. But more than that they should keep rates high for a long enough period to get people in the economy accustomed to the higher rates and adjust their own spending accordingly. Including, when they buy houses, pay tuition or invest in new businesses.
The Fed’s mandate is to protect the value of the dollar. Yet, the over/under on what the Fed is going to do seems to favor a pause.
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The whole discussion put me in mind of working as publisher, editor and writing assistant to Dr. Kurt Richebacher, whom many readers will recognize.
One thing he was insistent on doing was parsing the CPI numbers every time they were published.
The reason, he was incensed by the Bureau of Labor Statistics use of “hedonic price indexing” which allows them to pick and choose which components go into the CPI.
The term “hedonic” has Greek roots. It means “pleasure”. The components of the CPI are “hedonic” by trying to judge what the “pleasure” – or in economic terms “utility” the buyer obtains for the “quality of the attributes of a specific good.”
Yeah, it’s confusing. But it’s what allows news headlines of 4% inflation to be printed. That 4% figure is the “core” price increase – conveniently, leaving out food and energy, whose prices are more volatile. Hedonic price indexing is used in both the U.S. and the U.K.
I’ve been parsing through Dr. Richebacher’s letters of late while doing research for a new project.
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I’ll have more to say on “hedonic” price indexing in future missives. But for now, I’ll share this tweet from Charlie Bilello, from from Creative Planning Investor in response to today’s numbers:
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Even if the Fed pauses, these numbers will still matter to anyone who wants to buy gas, wear clothes, or eat food.
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Chuck again… yes sir, we the people will have to deal with them, like we always have… thank you Addison for our FWIW article today… So, tell me again, with all these items up so high, how does the stupid CPI only print at 4%? Oh, that’s right, I forgot, that once an item becomes to expensive that they follow, they remove it and replace it with somehting that’s not so expensive, that way they keep inflation down, artificially, of course, but at least you, me and all the other folks that come across the Pfennig, know the truth about the stupid CPI…
Market Prices 6/14/2023: American Style: A$ .6793, kiwi .6175, C$ .7524, euro 1.0807, sterling 1.2648, Swiss $1.1007, European Style: rand 18.4543, krone 10.5784, SEK 10.6880, forint 343.38, zloty 4.1208, koruna 22.0235, RUB 84.07, yen 140.00, sing 1.3416, HKD 7.8311, INR 82.10, China 7.1576, peso 17.19, BRL 4.8834, BBDXY 1,230.00, Dollar Index 103.13, Oil $70.31, 10-year 3.83%, Silver $23.83, platinum $977.00, Palladium $1,365.00, Copper $3.82, and Gold… $1,947.31
That’s it for today… Well, I’ll be at Busch Stadium when the Fed Heads make their announcement today, and I won’t be checking my phone for updates either… I really don’t care what the Fed Heads do, because in the end they’ll make the wrong move… I know I’ve told you this many times in the past, so foregive me if you’ve heard this before, but I love day baseballl games during the week… They’re called “get away days”. In the old days they would be called Businesssman’s Special, or “Ladies Day at the Park”… I don’t care what they call it now, just as long as there are at least a half-dozen of these middle of the week day games on the schedule… And with Andrew being a teacher, and have some time during the week, he suggested we go, and I jumped at the chance to go, especially with him! Steeler’s Wheel take us to the finish line today with their song: Stuck In The Middle With You… You know Clowns to the left of me, jokers to the right, here I am stuck here in the middle with you, yeah, that song… I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!
Chuck Butler