September 27, 2023
* currencies & metals get sold on Tuesday & overnight
* Wall Street Is going to require the FX market to change…
Good Day… And a Wonderful Wednesday to you… Well, the Brewers weren’t allowed to celebrate on the field last night, as the Cardinals prolonged their wait to be name division winners… Good friend, Rick, sent out a text to the group that said, “Where was this team all season?”… Good, clutch hitting, good pitching and good defense were all on display by the Cardinals last night, and those are things we should have seen a lot of this year, but… well, we didn’t! Our Blues won their exhibition game last night too… So, it was a good night for me! I started taking my new chemo Monday night… So far, so good… no problems yet… Now it just has to work to get the tumor in my jaw to recede… The 60’s band: The Buckinghams greet me this morning with their song: Mercy, Mercy, Mercy…
I know I sound like a broken record (Hey, they are back in style again, so it’s ok to say that again, YAHOO!) But the dollar got bought again yesterday all day, all the time… The BBDXY gained 2 more index points, which kept the euro below 1.06, sterling below 1.22, and Swiss below 1.10… The Asian and Pan Asian currencies have really taken it on the chin from the dollar in recent trading sessions. The Chinese renminbi has tickled the red line that the People’s Bank of China (PBOC) had drawn for the currency on the weak side… It will be interesting to see what the PBOC does when the renminbi does go past their red line…
Gold continues to be sold in the short paper market and the short paper traders brought Gold down to $1,901.40 at the end of the day… These raids on Gold and Silver are getting so commonplace that it’s almost accepted by the media who fail to report what’s going on in earnest… Or by the regulators who just continue to look the other way… This is getting completely out of hand, folks, and somewhere, someone has to put a stop to this daily bloodletting the short paper traders are laying on Gold & Silver… Please! Serentiy NOW!
The 10-year Treasury rose quickly back yesterday after a day of watching its yield drop, the yield rose to 4.52% And that just proves to me that the one day buying of the bond, was an orchestrated bond buying program that most likely was directed by the Fed Heads… I’m just saying…
And the price of Oil rebounded yesterday, gaining $2 to end the day trading with a $91 handle…
In the overnight markets last night… Broken record stuck on song two… The dollar got bought again last night, and pushed the currencies downward to even lower levels… The BBDXY gained 2 index points last night and starts today with a 1,269 figure… Gold is down again, and this time the short paper traders took it below $1,900… Gold has lost $9 this morning, and Silver has lost 8-cents… Every day, all day long, the dollar gets bought, and this is all happening while U.S. lawmakers are debating the budget that will most likely end up being suspended or something like that…
The price of Oil held onto to its $2 gain yesterday, last night… and starts today with a $92 handle. And the 10-year’s yield is 4.51% this morning…
I forgot to mention yesterday, that when I was chastising the Bank of England (BOE) and Swiss National Bank (SNB) for not hike rates to combat inflation, that they didn’t do their respective currencies any good by pausing… The franc has slipped to below 1.10 for the first time in a while, and sterling fell below 1.22… Remember, a weak currency invites other countries inflation into yours… So, this is a pretty good illustration of that thought… I’m just saying…
OK, regarding Gold… I found this piece on Kitco.com yesterday, let’s listen in… “Not only does Hooper see solid long-term bullish support for gold, but she said that an impending government shutdown could create some near-term safe-haven demand for the precious metal.
Congress has been unable to pass any funding legislation and it is expected the government will run out of funding for the fiscal year starting Oct. 1. According to some pundits, even if legislation was passed this week, it wouldn’t avoid a short shutdown next week.
Although a shutdown wouldn’t impact the nation’s sovereign debt, it would affect how it could conduct business domestically. Government employees would be furloughed.”
Chuck again… Yes, I mentioned the possible Gov’t shutdown last week, and said that it was a repeat of the drama that we just went through a couple of months ago… And while it is that, it is also a real threat this time… So, be prepared, is all I will say about that! And if Gold can’t find a bid while this drama is going on, tells me that the selling is just too intense right now… UGH!
I found this on Bloomberg.com last night and made a mental note to come back to it this morning! I won’t give an intro: “Inflation has cooled down from a year ago, but that’s failing to allay the pain of Americans who are still paying up at gas pumps and grocery aisles.
As a result, there’s a growing disconnect between policymakers, who point to cooling inflation indicators as a sign of progress, and people who are struggling to make ends meet. Even as the Federal Reserve’s favored measure of price gains eases, the cost of food, gasoline, car insurance and other essentials is still elevated after two years of persistent increases. The rate of core inflation stands at 4.3%.”
Chuck again… They also pointed out that “The price for car insurance rose the most since December 1976″… And as I explained months ago when the prices for everything went sky high, that they wouldn’t come back down to where they were before they spiked… It’s not how things work otherwise we would still be paying 23-cents for a gallon of gas at the pump! It’s a vicious cycle that goes on… prices on everything begin to rise, because there’s too much money in the system, and so the workers demand higher pay to combat the higher prices, and that makes the prices go higher still and so on… It’s never ended, until the interest rates go higher than the rate of inflation, and the deficit spending stops…
And before we head to the Big Finish this morning I wanted to talk about this article that Russ and Pam Martens wrote yesterday on their:
www.wallstreetonparade.com site… “According to Bank of America’s federal regulatory filing known as the Call Report, for the quarter ending June 30, 2023, it had $105.79 billion in unrealized losses on its held-to-maturity (HTM) securities. That figure is not only far beyond the realm of what its peer banks reported, but it represents a stunning 34 percent of all unrealized losses on held-to-maturity securities reported by 4,645 FDIC-insured commercial banks and savings institutions as of June 30, according to the FDIC’s Quarterly Banking Profile.
For the quarter ending June 30, the FDIC reported that all 4,645 FDIC-insured financial institutions had $309.6 billion in unrealized losses on held-to-maturity securities.”
Chuck again… Ok, so these are held to maturity bonds, right? if the bank just holds them to maturity they get their principal back, and there’s no loss, right? Well, that’s the trap that SVB fell into… When there was a run on their bank deposits, the bank had to sell bonds to get cash, and that’s where the losses began to pile up… So, this is not information that should be taken lightly… Instead it should be looked at as dangerous… risky… and a potential time bomb… Got Gold?
The U.S. Data Cupboard yesterday has the Case/Shiller Home Price Index, which I told you had been negative on monthly basis for some time now but, it was time for it not to be negative and it wasn’t! the HPI gained .01%… how about that? The Stupid Consumer Confidence index showed a drop from 108, to 103… Well, what did anyone expect here? The stock markets hasn’t exactly been running on all eight these days…
To recap… Chuck sounds like a broken record, with all the daily talk of dollar buying continuing… The BBDXY has soared in the past week, and traded at 1,267 last night… Chuck takes the BOE And SNB to the woodshed, for not hiking rates last week… And everyday prices remain high in the U.S. and it’s draining the resources for consumers, who have had to resort to charging everything… I don’t see how that doesn’t end up in tears…
For What It’s Worth… I found this article on Bloomberg.com yesterday afternoon, while looking for something else! It’s an article about how stock trades are going to start settling in just one day, while FX trades in 2 days (spot) and what problems this will cause the FX markets come next May… and it can be found here: Wall Street’s Need for Speed in Stocks Is Reshaping the FX World – Bloomberg
Or, here’s your snippet: “A looming shift in the way US equity trades are settled is sending unintended shock waves through the $7.5 trillion-a-day global market for foreign exchange.
At major financial institutions including banks, brokers and investment houses, currency desks are preparing for the world’s biggest stock market to halve the time it takes to settle equity transactions to just one day.
That switch — due in May next year — will put US stocks out of step with the world of foreign exchange, where trades typically take two days to complete. It means many overseas institutions trying to buy American assets will need to secure dollars in advance to ensure they can make settlement — or face a desperate scramble to find the cash in time.
Failure to do so would mean purchases falling through entirely.
The change sets up a potential pivotal moment for global currency markets that could reorder the established trading day. Longer hours for foreign-exchange desks in New York, rising volumes in Asia’s notoriously volatile mornings, and the relocation of staff out of Europe are among potential side effects when the new regime comes into force.
“The question is how to book, fund and settle any required foreign exchange trades within the required one-day time-frame when most FX markets settle on T+2 today,” a Citigroup Inc. team led by Okan Pekin wrote in a recent report. “Time zones matter in the move towards accelerated settlements and foreign investors are always the hardest hit.”
Chuck again… boy do I see this changing the way foreign exchange trading desks work now… stay tuned because I’m sure there will be lots of follow up on this going forward…
Market Prices 9/27/2023: American Style: A$ 6369, kiwi .5928, C$ .7392, euro 1.0544, sterling 1.2141, Swiss $1.0888, European Style: rand 19.1871, krone 10. 7288, SEK 11.0234, forint 370.43, zloty 4.3819, koruna 23.1747, RUB 96.69, yen 149.18, sing 1.3714, HKD 7.8206, INR 83.23, China 7.3113, peso 17.61, BRL 5.0137, BBDXY 1,269.12, Dollar Index 106.42, Oil $92.24, 10-year 4.51%, Silver $22.81, Platinum $908.00, Palladium $1,278.00, Copper $3.64, and Gold… $1,892.10
That’s it for today… My beloved Mizzou Tigers travel to Nashville this Saturday to play the Commodores… They need to win this game to 5-0 and then head to a BIG GAME with LSU! I sure hope they don’t look ahead to the LSU game and forget to play Vandy…. I know, it’s only exhibition, but our Blues are looking better this year, especially on defense… Last season’s defense was awful, so I sure hope they got that straightened out! Well, I finally heard from my wife yesterday… She’s having a grand time in S. Florida… We had some loud storms come through the area last night, good thing the Cardinals were in Milwaukee… At one point in the early evening the sun was out but it was raining! I looked for a rainbow, but couldn’t find one in the sky… And RIP Brooks Robinson, the greates 3rd baseman to ever play… I know that’s arguable, but in my opinion that’s where I rank him… REM takes us to the finish line today with their mega hit song: Losing My Religion… I hope you have a Wonderful Wednesday today, and please, oh please, with sugar on top, Be Good To Yourself!
Chuck Butler