A Banana Republic?

April 6, 2023

* dollar gets bought on Wednesday

* Short time holders sell Gold… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Swept! My beloved Cardinals got swept at home, no less, by the Braves… UGH! The team’s pitching is shameful… I’m just saying… Stormy weather… My dad used to go through the house singing that song… That’s what we had yesterday mroning, but then the clouds moved on, the sun came out and it was a pleasant day… I only stepped out for a couple of minutes yesterday, other than that I basically slept all day… I woke up at one point, turned on the Cardinals game and saw they were losing 5-0, and turned it off, and went back to sleep… On Tuesday this week, I thought I had turned the corner with this cold, and Wednesday, not so much… UGH! Yes, greets me this morning with their song: Long Distance Runaround… 
Well, the selling of the dollar turned yesterday, and for at least one day, the dollar got bought, as witnessed by the 3 index points the BBDXY gained on the day. Gold was flat on the day, and Silver was only down one thin dime… So, it was really a non-moving day…  I find those kinds of days to be a BIG waste, of time, of effort, of attention, and of course, of money…  Gold was up $6 in the early trading yesterday, but as the day wore on, it slipped, problably from profit taking from the short time holders of Gold. Gold did manage to eke out a 30-cent gain on the day, but to me that’s just a flat day… 
I was thinking that the 50 Basis Points rate hike by the Reserve Bank of New Zealand (RBNZ), might cause some ripples in Gold’s water yesterday, but seeing that it didn’t, I’m thinking that Gold will continue to move higher and take out its all-time high of $2,078… 
I mentioned the short time holders of Gold above… And these folks are “in for a minute”… They buy and sell Gold like it was marbles… They don’t understand that Gold is a store of wealth, and that once you have it you don’t willy nilly go around telling people you have it, and you don’t get the urge to sell it every time it bumps higher… When it bumps higher, you smile, and think that you’re sure glad you listened to someone in your early age and bought physical Gold! 
In the overnight markets last night… There was no follow through on the dollar buying yesterday, so that was as I suspected a one and done deal… The dollar didn’t get sold either last ngiht overseas, the BBDXY is trading in the same clothes it had on yesterday at 1,225.  Profit taking seems to be the rage these days in Silver… I wonder how many folks had a Silver story like I told you about the other day?  Gold is off $4 in the early trading to start our day, and Silver has lost 17-cents… I don’t believe that we’ve seen hide nor hair of the short paper traders this week, not that I miss thiem or anything like that, it just gives me the willies not knowing when they will show up at the COMEX with their arms full of short paper trades… 
The price of Oil is steady Eddie with an $80 handle… I read this morning that Oil traders are aware that the demand for Oil, black Gold, Texas Tea, is not what high priced Oil is made of… But they want to see what the oil production cuts that OPEC announced earlier this week, affects the reserves, etc.   Make sense to me… 
The line to buy the 10-year Treasury must go around the block! There’s been so much buyng of the bond this week, that the yield on the bond has drpped from 3.50% on Monday to 3.27% today… That’s quite a move in bonds, folks… I used to be a bond trader, and a move like that would have the bond desk up in arms, and the guy that was long the bond, would be strutting around like rooster! 
It’s a sign of the times… earlier this week, I read where Walmart will be closing a number of stores… Hmmm, I thought, the economy is showing signs of collapsing, when Walmart has to close stores… Then news came yesterday that the other Big Box Store, Costco, reported their lowest U.S. sales growth in 3 years! Uh-Oh! These are signs/ omens if you will, folks… You can either ignore them, or… pay attention, ane do something to protect your nest egg… Got Gold? 
Well this Tweet was well timed, as it came right after the ADP Employment Report showed only 145,000 jobs added in March… check this out: 

The Kobeissi Letter
Largest Layoffs of 2023, So far:
1. Amazon: 27,000 employees
2. Google: 12,000 employees
3. Meta: 10,000 employees
4. Microsoft: 10,000 employees
5. Goldman Sachs: 3,200 employees
6. Coinbase: 25% of employees
7. Zoom: 15% of employees
8. Glassdoor: 15% of employees
9. Twilio: 15% of employees
10. Indeed: 15% of employees
11. LendingClub: 14% of employees
12. Vimeo: 11% of employees
13. Docusign: 10% of employees
14. Salesforce: 10% of employees

15. Gemini: 10% of employees

Chuck again… Add to those numbers (330,000 in tech alone) the story I brought to your attention the other day, about Mickey D’s announcing layoffs… Those won’t be tens of thousands, but… they all add up! 
How would you like to be a Japanese yen trader? or Japanese hedge fund trader? These guys have been whipsawed  and turned around, inside out, and put out to dry… They get all lathered up when the rumor begins that the Bank of Japan is going to ease it’s lock on the 10-year Gov’t bond’s yield and they remove their short positions in yen, and yen rallies, but then word from the Bank of Japan is …. crickets… And so the yen gets sold again, and they are left holding the bag… 
Before I head to the Big Finish today, I have something to get off my chest… if you dont’ want to hear about it, and think it’s just Chuck whining about this and that again, then go ahead and skip to the FWIW article today, for those of you who stayed around, here we go!   You know, i’ve been watching and reading about this indictment of our former POTUS… 

I never want to bring politics into a Pfennig newsletter discussion, but… 
This whole thing reeks of bad politics…  I never, in my life, thought I would see a day when a 
former POTUS was brought to court and indicted… Shouldn’t these guys just be able to go off into the sunset
and leave them alone?  
I read this and thought to myself, Yes, they should think that way:   “South American leaders have responded by pointing out that the arrest of a former president means that the US is now in the same category as Banana Republics where each successor president arrests his predecessor. “
I’m also reminded of how my former Big Boss, and friend, Frank Trotter, would describe the U.S. as a banana republic back in the day… It’s all coming home to roost, Frank…  You were just ahead of your time… 
The U.S. Data Cupboard today, as the usual fare for a Tub Thumpin’ Thursday, the Weekly Initial Jobless Claims. Recall I said last week that we were sure to begin to see the number of claims rise again, and that’s what they did the previous week, so a continuation of that new trend is what I see for today… In addition today, we will hear what St. Louis Fed President, James Bullard has to say, he of the thought last fall that interest rates needed to go higher and reach 5.25% before any talk of stopping… I wonder if he’s still singing from that same song sheet… These Fed Heads do like to waffle… they should be called the Eggos, instead of Fed Heads! HA 
Tomorrow’s Data Cupboard will be all about the Jobs Jamboree…  The BLS’s last report showed that they had cooked the books to show a 311,000 gain in jobs in February… I called BS on that and showed you how I came to that decision… March’s forecast for job creation is 238,000… And I’m sure the BLS will go through hell and high water to make sure that forecast is met… I’m just saying… 
To recap… Yesterday was a non-moving day, with the dollar gaining 3 index points, but the feeling in the markets is that the selling of the dollar should continue…  Overnight we saw
layoffs and firings are begining to add up folks… this strong and resilient economy bs is about to be exposed… are you ready? 
For What It’s Worth… Well, today, to end the week, I have a longtime friend’s letter titled: The Wiggin Sessions, and in it Addison Wiggin talks about the Banking Crisis and it can be found here: The Wiggin Sessions: Real Experts. Real Conversations. Real Financial Insights.
Or, here’s your snippet: “The banking crisis is far from over. Don’t let the talking heads on television tell you otherwise. It’s a story developing in real time.

The big question we should be asking is: Who’s next? Which banks are most at risk of failing? And is your money exposed?
Silicon Valley Bank (SVB) fell because it hoarded uninsured deposits.
A large proportion of these deposits were invested into “hold-to-maturity” securities– long term bonds… There was no risk officer on staff to monitor and interpret the effects of rapidly rising interest rates on these holdings.
SVB is not the only one caught in this bind spun by aggressive Fed monetary policy.
Countrywide, US banks hold over $620 billion worth of unmatured bonds on their books.
This took SVB down in two days. Then we had what we’re now calling The Banking Crisis of 2023.
Signature Bank failed a week later.
Western Alliance Bank has seen a 115% change in deposits with 57.7% of deposits uninsured.
Goldman Sachs saw a 95% increase in deposits at the end of 2022 with 47.7% of them being uninsured.
Morgan Stanley … 97% increase and 29.8% uninsured …
JPMorgan Chase saw just a 31% increase in deposits, but they’re sitting on more than $2 trillion in assets of which 52.5% of deposits are uninsured.
The list goes on… unfortunately. The real point here is: a whole generation of entrepreneurs and bankers grew up in an environment where it looked like near-zero interest rates would last forever.
Even the banks– who ought to know better– were betting on a longer period of low interest rates than what the Fed planned when they started fighting inflation.
What’s left: A risk-tolerant environment like nothing anyone’s ever seen.
Imagine a run at any of these banks as depositors realize there are higher rates available in money market mutual funds.

The results could be catastrophic.

Chuck Again… yes, they well could be catastrophic, and when that happens, it’ll bring about the introduction of digital currencies to the masses… Are you ready for that?  Got Gold? 
Market Prices  4/6/2023: American Style: A$ .6698, kiwi .6280, C$ .7426, euro 10915, sterling 1.2477, Swiss $1.1048, European Style: rand 18.2269, krone 10.4241, SEK 10.4293, forint 344.50, zloty 4.2834, koruna 21.4435, RUB 80.99, yen 131.50, sing 1.3288, HKD 7.8499, INR 81.99, China 6.8730, peso 18.26, BRL 5.0424, BBDXY 1,225.62, Dollar Index 101.84, Oil $80.93, 10-year 3.27%, Silver $24.93, Platinum $1.010.00, Palladium $1,434.00, 
Copper $4.03, and Gold… $2, 018.63
That’s it for today… And this week… I was supposed to see my heart doctor yesterday, but I had to postpone that appt. since I have this stupid cold! UGH! Well, tomorrow is Good Friday, and Sunday is Easter Sunday… A very holy week for most of the population. I can’t wait to see my darling granddaughters in their Easter dresses and bonnets! I sure hope I’m feeling better by then! I don’t have any doctor appts next week! YAHOO! The following week is chock-full-o-appts, though… But I’ll worry about them then! i really had a lot to say yesterday, didn’t I? I checked later, and it was over 2,700 words!  My average letter is about 2,000 words.. no wonder the letter was later yesterday than usual! HA!  Bob Marley takes us to the finish line today with his song: One Love/ People Get Ready… I hope you have a Tub Thumpin’ Thursday today, a Fantastico Friday tomorrow, and a Blessed Easter on Sunday, and don’t forget to Be Good To Yourself! 
Chuck Butler