- currencies and metals rally as the dollar gets taken to the woodshed.
- It’s an FOMC week….
Good Day… And a Marvelous Monday to you! Man, I’m really dragging the line this morning. Too much fun yesterday, I guess… I had a wonderful Father’s Day with my kids and grandkids, I hope you had a wonderful day too! My Cardinals lost 3 of 4 games this past weekend in Milwaukee. UGH! There was some major saber rattling going on in the MidEast, so we have that to talk about today… R.E.M. Greets me this morning with a very timely song: It’s The End Of The World As We Know It…
Well, by now you all have heard that Israel attacked Iran and tried to take out their nuclear facilities… The rumors are ripe that the U.S. was behind this attack… Either way, the dollar got sent to the woodshed on Friday, and lost 9 index points in the BBDXY, finishing out the week at 1200… The euro shot higher to the 1.15 handle, and the rest of the currencies followed the Big Dog down the street chasing the dollar…
I told you last week that the dollar was slowly showing us that it was entering a weak trend, and there were tons of articles this week with pundits coming out of the woodwork, talking about how the dollar’s slide could get much deeper… Well, if the dollar is indeed entering a new weak trend, then these pundits will be proven correct… But there was one thing that all of these articles forgot to mention, and that is there’s this entity called the PPT that could correct the dollar’s slide in a New York Minute… I’m just saying…
But history shows us that that during the second half of a new POTUS’S first year, the dollar slides… So, we have that going for us, eh ? And you longtime readers know all too well that I’m a BIG history repeating itself person…
Gold had a good end of the week, last week… On Thursday Gold gained $32, and on Friday Gold gained $44 to end the week at $3,433… Silver has found the footing after its initial surge, a bit slippery… Silver ended the week at $36.35… Gold showed its true colors by rallying after the news of a potential Middle East war came to light…
And the price of Oil leapt to $74 at one point on Friday and finished the week at $72.98… The threat here is that the Strait of Hormuz could get shut down in the events of a conflict breaking out, and that would deep six Oil deliveries to the rest of the world, including the U.S. Do you see now the importance of the U.S. getting back to Oil independence?
In the overnight markets last night… The dollar gained 1 index point, and tried to wrap a tourniquet around the bleeding in the dollar… Remember, a weak trend in the dollar does not mean a ONE-WAY Street… There will be times that the dollar rebounds a bit, but if the dollar is truly in a weak trend, it will swiftly return to the underlying weak trend… I’m just saying…
Gold is seeing some profit taking to start the day/ week this morning and is down $11… Silver is flat to up a penny… The price of Oil remained in the $72 handle overnight, and the 10-year Treasury, starts the week with a yield of 4.40%
The key thing taken out of this mess last week was that the dollar is no longer a safe haven go to… And neither is the Treasuries… Gold has replaced these to former stalwarts of safe havens when the geopolitics begin to get ugly…
I found this on Barron’s this past weekend: “The U.S. dollar fell to the lowest level in more than three years Thursday, extending one of its longest runs of declines on record as the “Sell America” trade gathers pace among foreign investors.”
The Big Event this week will be the FOMC Meeting on Wednesday… I think the FOMC will leave interest rates unchanged, and point to the future that will have a rate cut after more economic data prints… This won’t make the POTUS very happy, and he’s called for a full 100 Basis Points (1%) rate cut…
There’s also a note going around that a “shadow Fed Chairman” could be in the works, thus taking the interest rate setting away from the FOMC… Look, the Fed Heads are a bunch of chuckleheads, but it’s the way we’ve done things since 1913… I think that removing this ability to set interest rates would be very upsetting to the markets… I’m just saying…
I found this on Bloomberg.com this morning, regarding China and its currency. This is interesting to me that is… “China’s desire to boost exports at a time of global trade turmoil means the yuan now looks set to weaken against most major currencies. One possible exception: the dollar.
The People’s Bank of China has kept the yuan’s moves against the dollar relatively steady through its daily fixing. The diverging strategies may suggest authorities are allowing the yuan to weaken against other currencies, rather than the dollar, to preserve competitiveness and cushion its export sector during ongoing trade negotiations with the administration of US President “
Chuck again, and once again, the media uses “yuan” as the currency’s name for China’s currency… They do that because saying “renminbi” is too difficult for them! The official name of the Chinese currency is renminbi…
Do you believe the Chinese are allowing the renminbi to weaken VS the dollar to tick off the POTUS? Well, that may hold a little bit of their reason for doing this, but the real McCoy here is that they need to keep exports to the U.S. going at a high rate… period…
And before we head to the BIG FINISH this morning, I want to give a big shout out to the Congressmen who sponsored a new Bill to audit the Fed… The initiative, known as the Gold Reserve Transparency Act of 2025 (House Bill 3795), was introduced by Congressman Thomas Massie alongside three co-sponsors.
The U.S. Data Cupboard this week will be dominated by the FOMC meeting on Wednesday. But before we get there today, we’ll see the color of the May Retail Sales… The BHI (Butler Household Index) indicates that Retail Sales for May will be negative… We’ll also see the color of May Industrial Production and Capacity Utilization, and I think the Industrial Production will also be negative…
To recap… The dollar got sold down the river late last week after the report of a Middle East conflict… Gold soared and as Chuck pointed out last week Gold is the new safe haven above the dollar and Treasuries… It’s a FOMC meeting week, and Chuck thinks it’ll be same-o, same-o for the FOMC..
For What it’s Worth… I mentioned this above this morning, so I thought it to be appropriate to have an article to back it up. This is about taking away the FOMC’s rate setting ability and it can be found here: Effort to strip Fed of interest paying power seen likely to bring upheaval to markets | Reuters
Or, here’s your snippet: “A Republican senator’s plan to take away the Federal Reserve’s power to pay banks interest on cash they park on central bank books could cause chaos for monetary policy implementation if it were implemented, market participants said.
In recent days, Senator Ted Cruz of Texas has been speaking about this power and his desire to see it ended as part of what he views as an effort to save money by the federal government. Stripping the Fed of the longstanding power would save the government $1 trillion, Cruz said in a CNBC interview last week. The senator said then that he did not know if it was likely his effort would work but that it was certainly possible.
On Wednesday, Bloomberg, reported that Cruz had also lobbied President Donald Trump, who has long been at odds with the Fed, as well as Republican colleagues, about his idea.
“We’re agonizing trying to find a $50 billion cut here and there. This is over a trillion dollars, big dollars in savings,” Cruz told Bloomberg, saying of the payments, “half of it is going to foreign banks, which makes no sense.”
Cruz’s office did not respond to a request for comment. The Fed declined to comment.
Cruz’s effort is being treated cautiously by Senator Tim Scott, the Republican from South Carolina who chairs the Senate Finance Committee. “While the desire to return to pre-crisis monetary policy operating procedures is understandable,” the matter must be considered under normal Senate procedures, Scott said in a statement. Any move on this must start with a hearing, Scott said, adding, “this is not a decision to be rushed – it must be carefully considered and openly debated.”
Chuck again… I don’t really think that this will come to fruition, but you never know?
Market Prices 6/16/2025: American Style: A$ .6516, kiwi .6046, C$ .7367, euro 1.1576, sterling 1.3585, Swiss $1.2332, European Style: rand 17.7799, krone 9.9032, SEK 9.4676, forint 346.53, zloty 3.6823, koruna 21.4680, RUB 78.71, yen 144.70, sing 1.2801, HKD 7.8494, INR 86.05, China 71801, peso 18.90, BRL 5.5436, BBDXY 1,201, Dollar Index 97.99, Oil $72.29, 10-year 4.40%, Silver $36.36, Platinum $1,267.00, Palladium $1,059.00, Copper $4.80, and Gold… $3,419
That’s it for today… I cringed when I saw the report that Israel had attacked Iran unprovoked… I don’t know where this is going to lead us, but my spider sense is telling me that it’s not a good place… I’m still all by myself here and doing just fine! My vitals are good every day when I take them, I have gained 5 lbs in the last couple of weeks, and that’s not good! But my doctor told me to stop losing weight.. So, I’m just following his orders! HA! A grand time yesterday on the Butler Patio… It was a cloudy day, but no rain, so it was all good! Yes, takes us to the finish line today with their song: Long Distance Runaround… I hope you have a Marvelous Monday today, and Please! Be Good To Yourself!
Chuck Butler