July 13, 2023
*The rout on the dollar was widespread…
* Fund Managers think the dollar has peaked…
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, we had some major wind, and Thunderstorms move through last evening, and the blew out the power… The power was out for about an hour or so, and being all by myself, I had to look for candles to light… I found a couple and that’s all I needed. I also found out that my cell phone doesn’t get good reception in the basement, when on 5G… I had to keep opening the slider door, and stick my phone outside to get messages to send… Ahh, those 3rd world problems plague me again! Tsk, tsk… that’s not even something to joke about Chuck, and you should know better! No baseball last night, ugh! The Men’s National Soccer Team played and the game went to penalty kicks once again… And this time the men’s team ran out of luck, and lost… And the Stl. City SC team played in Los Angeles last night, so the game started at my bedtime! But, they too, lost last night, so not a good night for soccer teams that I follow… I’m dragging the line today, so I need something to give me a jolt! And Humble Pie will do that trick, as my iPod plays Humble Pie’s song: I Don’t Need No Doctor… That ought to do the trick!
Well, I told you yesterday that we would see some movement in the asset classes after the Stupid CPI printed and that’s exactly what we saw… The dollar got sold like it was a pet rock in the 70’s… The BBDXY lost 12 points on the calendar day of Wednesday… I said the other day that I hadn’t recalled the last time I saw the dollar lose 8 index points when it did that last Friday… So, this 12 – index point loss yesterday was a new record for me… The euro rose through the 1.10 handle and ended the day at 1.1142… WOW ! And Gold? Gold gained $25 yesterday, and was up even more, before the short paper traders decided to trip some off the top… Silver gained 96-cents, and was trimmed up at the end of the day too…
So, what caused all these gyrations in the assets? The Stupid CPI, that’s what! June CPI printed at just a .02% gain, and the year to date figure fell to 3.0%, from 4.0% in May… Now before we go on… John Wiliams at www.shadowstats.com had the June inflation at 10.8%, down from 11.9% in May… But look at that difference between the Stupid CPI, which is proven to be cooked, massaged, and had hedonic adjustments added to it, and the shadowstats.com inflation number… Ok, so now the markets have gone all ga-ga over the Stupid CPI print once again, and they have all figured out all by themselves that with inflation on the run to lower levels, the Fed Heads won’t have to continue to hike rates…
Remember last month, when I told you that the BLS and Fed Heads were all in cahoots with each other, with one telling the other what they need for the Stupid CPI to seen as, and the BLS complying… But who am I took look a gift horse in the mouth? If the markets want to go down this rabbit hole and think that inflation is whipped, and trade the dollar like it had, then I won’t argue with them, just point out that they are wrong… inflation is not whipped, and if you don’t believe go to the grocery store, and spend $100 and see how much you get… if the baggers didn’t put just a couple things in one of those plastic bags, so it makes it look like you bought a lot, you could probably get by with 1-2 bags…. Now tell me that it’s always been like that! No it hasn’t, and it won’t ever go back to the way it was either!
The price of Oil moved higher in the $75 handle yesterday, and the 10-year got bought, based on the inflation outlook too… No rate hikes = lock in bond yields…
In the overnight markets last night… The dollar selling didn’t stop overnight folks… The BBDXY lost 3 more index points and starts today at 1,208… And the old Dollar Index has fallen all the way down to 100! The widespread gains of the currencies across the globe, is something to see, for this tired old eye… Gold and Silver are basically flat to up a bit, this morning, as they await the U.S. markets to return to their desks. You know, when the dollar’s losses are widespread, like they are at this point, fund managers used to say they could throw a dart at a board of currencies, while blindfolded and find a winning currency… Shoot Rudy, even the Japanese yen is climbing on board this currency rally wagon… Earlier this week the yen hit 144, and this morning it is trading 138… See, what I mean about a widespread rally for the currencies?
The price of Oil is steady Eddie with a $75 handle, and the 10-year is getting bought like funnel cakes at a State Fair, as investors seem to think that the Fed Heads’ rate hikes are a thing of the past… I don’t know, but the Stupid CPI sure has thrown a cat among the pigeons, and while thta doesn’t surprise me, it does a bit in how damaging it has been to the dollar… Opposites are in play here, and have been for some time now… So, while a lower inflation rate, if that’s the really the case, is good for the U.S. economy, it’s bad for the dollar…
Speaking of inflation, which I was always taught in economics classes is equal to money supply… And money supply is needed to grow to deal with the deficit spending policies of our government… Here’s Bill Bonner in his daily newsletter yesterday talking about the deficit spending: “The U.S. national debt has increased by $1 trillion in the five weeks since President Biden signed a bill into law that effectively turns off the debt ceiling until 2025.
On June 3, however, Biden signed legislation reflecting negotiations with House Republicans that requires a small spending cut next year and allows unlimited federal borrowing until 2025. With no debt ceiling in effect, federal borrowing jumped more than $350 billion in a single day and crossed the $32 trillion mark in less than two weeks.
Whee! It’s hi-ho…and off to the poorhouse we go!”
Did your parents ever warn you about ending up in the poorhouse Jail? They instilled a fear in me of debt that I find it very interesting that I found a career that centered around Debt?
Well, you know one of the best perfroming currencies these days? I can’t believe I’m talking about this currency so glowingly… The Mexican peso… Last week the peso had reached a muti-decade high of 17.05, and this morning, the peso is 16.89… Remember the peso is a European priced currency so the lower the price goes, the more return to you VS dollars… In the middle March, this year, the peso traded 19.05… So, the higher interest rate in Mexico is fianally helping attract buyers to the peso… Just be careful here folks, I’ve seen too many investors, and businesses get burned in Mexico…
On the other side of the planet from pesos, is the Swiss franc, that has been performing nicely ever since the Swiss National Bank got interest rates on the positive side of the ledger, and went about addressing their rising inflation in a timely manner, and not let iinflation run freely for a year, before addressing it like the Fed/ Cabal/ Cartel did…
And you need to be careful with the pound sterling, folks… They have a mortgage bubble in the U.K, and with interest rates rising, it’s all going to come crumbling down at some point, but proving once again, that something may be quite evident, it might not be imminent… I’m just saying…
Ok, I don’t pull any punches, long time readers know that, I also don’t shy away from telling you things like this: I’m a subscriber to Prager U… And yesterday, the Prager U, email to me began like this: “We thought we lived in a free country. We’re finding out we don’t.
The American people have been sold out to powerful political and corporate elites. The media and journalism—historically the watchdogs for this type of corruption—are part of it.
The Federal Bureau of Investigation (FBI) and the Department of Homeland Security have been weaponized to silence conservative Americans! Then the media lies to the public about it.
Now, they’re not even hiding it.”
Lies, and innuendo, that became the motto of the FBI during the previous administration, and that’s a black eye on the U.S. as seen by foreigners… And just another reason that countries are backing away from buying Treasuries…
Speaking of Treasuries… The Fed’s Balance sheet hasn’t gone through major weakening since it was announced that the Fed Heads were no longer in the bond buying business… At the height the balance sheet was $8.9 Trillion, and it stands as of July 5, at $8.3 Trillion… What does that tell you? Well, it tells me that the Fed is lying about not buying bonds… Because, you’re telling me that they’ve only seen 600 Billion in maturities since they supposedly stopped buying bonds? I’m nto buying it…
And before we head to the Big Finish today, Bloomberg.com had an article this morning, talking about the Big Fund Traders are betting that the dollar has reached its peak… Let’s listen in : ““Broadly we would probably assume that the US dollar has had its peak and there might be room for other currencies to perform better in the latter half of 2023-2024,” said Brad Gibson, co-head of Asia Pacific fixed income at AB. This is because the US economy will slow and the Fed is likely to start easing, he said”
Could this be the beginning of a multi-year weakening for the dollar? We’ve seen so many false dawns in recent years that I feel like the boy who cried wolf…. The PPT and their Treasure Trove of Exchange Stabilization Funds are always lurking around the dark alley, and that causes me to worry… But then when I was a young man I loved reading Alfred E. Newman, who would say, “What, me worry?” And that’s the stance I need to take with regards to the PPT…
The U.S. Data Cupboard had the Stupid CPI report yesterday, that we’ve already talked about… For the life me, I still don’t know how the markets believe the Stupid CPI report… But they do, and so that’s that! Today’s Data Cupboard will have the PPI for June (Wholesale inflation)
To recap… The dollar got sold like funnel cakes at a State Fair yesterday, after the Stupid CPI printed, and showed that annual inflation has fallen to 3.0%… John Williams says that real inflation is still 10.8%… Now which one do you relate to 3% or 10.8%… Gold gained $25, and Silver gained 96-cents yesterday, while the BBDXY lost 12 index points! Chuck points out some currencies that have been performing nicely other than the euro…
For What It’s Worth… Today’s FWIW article is about the debt accumulation of the Millenials, and how this is going to weigh on the econonmy going forward, and it can be found here: Millennials Face Record $4 Trillion Debt Crisis — They’re Struggling to Build Wealth, Homeownership And Retirement Savings (yahoo.com)
Or, here’s your snippet: “A Wall Street Journal analysis of Federal Reserve data reveals a concerning financial situation for people ages 30 to 39, which constitute the majority of the millennial generation.
The demographic accumulated nearly $4 trillion in debt during the fourth quarter of 2022, reflecting a substantial $140 billion rise from the preceding quarter. The surge represents a 27% increase since late 2019, constituting the most significant upswing in debt accumulation since the 2008 financial crisis.
Contrary to popular belief, the escalating debt among millennials in their 30s cannot be solely attributed to discretionary spending on luxuries. While the rising costs of certain consumer goods, impacted by inflation, have played a role, it is not the sole driver of their financial predicament. The mounting debt is indicative of broader economic challenges faced by this generation.
Fed Data
The New York Fed’s data reveals that millennials in their 30s are accumulating debt at an alarming rate and are struggling with credit card and auto loan repayments. Delinquency rates in these areas have soared, further compounding their financial difficulties.
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Seventy-three percent of U.S. millennials in this age group live paycheck-to-paycheck, according to data from finance and commerce research hub PYMNTS.com.
Adding to their woes, this age group faces an additional obstacle to wealth accumulation because of the historically low level of housing affordability. This exacerbates the challenges they face in building financial security and long-term prosperity.
A key factor in this story is how student debt has affected millennials’ financial situation. According to a survey by Legal & General, more than one-third of millennials say their student loans have prevented them from buying a home.
Chuck again… Wanna know what I think is going on here? Well, you’re going to hear it anyway! HA! I think the the millennials are just waiting for their parents to croak… I know that sounds heartless, and it is, but if you think about it you’ll come to same realization… It’s that or… they’re just waiting for the bailout from the gov’t…
Market Prices 7/13/2023: American Style: A$ .6855, kiwi .6357, C$ .7600, euro 1.1171, sterling 1.3066, Swiss $1,1586, European Style: rand 18.0513, krone 10.0832, SEK 10.3164, forint 336.00, zloty 3.9691,
koruna 21.2735, RUB 89.96, yen 138.40, sing 1.3256, HKD 7.8235, INR 82.07, China 7.1617, peso 16.91, BRL 4.8206, BBDXY 1,295.28, Dollar Index 100.22, Oil $75.83, 10-year 3.82%, Silver $24.27, Platinum $963.00, Palladium $1,302.00, Copper $3.84, and Gold… $1,959.04
That’s it for today… And this week, of course… I have to get going this morning, and have my car at the shop at 8 am sharp! Just an annual inspection is all it needs, but I have to leave it with them, as they are busier than a one-armed paper hanger… Darling daughter, Dawn, will pick me up and bring me home… I’ll figure out how to get back there when its done, when the time comes… If I had two good legs, and was in better shape, I could walk there and back.. But if’s and what if’s were rain drops, I would be a desert… Saturday night, will be a big one in downtown St. Louis, as both the Cardinals and Stl. City SC soccer team will play… I’m going to the soccer game with oldest son, Andrew, and we’ll Uber home, … wink, wink… The great Al Stewart takes us to the finish line today with his song: The Year of The Cat… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and please, oh please, with sugar on top, Be Good To Yourself!
Chuck Butler