- The dollar gets bought in the overnight markets last night…
- What is BOA up to? Playing hide-n-seek?
Good Day… And a Wonderful Wednesday to you! Well, my son, Alex’s wedding is fast approaching, and yesterday I had to go and have my new tux’s legs hemmed… Not that the woman doing the sewing was going to hand them back to me done, I’ll have to go back and pick them up next Tuesday… The jacket fit me perfectly….. Things sure have changed since I last wore a tux, at Daughter Dawn’s Wedding… I doubt I’ll ever have an occasion where I’ll need to wear my tux again, but, just in case…. It’ll be hanging in my closet! Much like the new suit I bought last spring! The Eddie Higgins Trio greets me this morning with their version of: Have Yourself a Merry Little Christmas…
Well, the manipulation of the markets continued on Monday, even though some areas were closed…. The dollar ended the day unchanged at 1.274, while Gold lost $21, and Silver lost 2-cents… For more than a month, the short paper traders were taking a pound of flesh from Silver and leaving Gold somewhat alone…. Now, that appears to have changed… Gold was closed below $2,600, and $2598 yesterday…. Back to where it was around Sept 19th… The last 7 weeks have been glorious to Gold holders who follow the price… But now it’s back to where it was right before the Fed Heads first cut interest rates…. The next move upward should be a doozy, folks… So, before Gold takes off for higher ground again, why not pick some up at these bargain prices?
The price of Oil remained in the $68 handle yesterday, but fell through it all day long… Starting at $68.74 it finished the day at $68.00…. So, in essence it was down on the day about a buck…. And the 10-year’s yield? Well the bond boys took the yield up to 4.44% once again yesterday… It will be interesting to see if the Fed Heads step in and try to massage the yield back down again or will they just throw in a towel?
In the overnight markets last night…. well, the dollar buying seems to accelerate when the overnight markets take over the con from the U.S. and last night the BBBDXY gained 6 index points to trade at 1,280 this morning…. This America first line from Trump is really beginning to give me a rash… Not that I don’t want our country to be number 1, it’s the way we’re planning of achieving that aim… With tariffs… Gold is up $10 to start the day today, and Silver is up 22-cents… The U.S. short paper traders haven’t arrived at their desk yet, to received their instructions for the day….
The price of Oil remained in the $68 handle overnight, and the 10-year’s saw some buying overnight, with the yield dropping to 4.39% this morning…. I can see the Fed Heads slapping themselves in the forehead, and saying, ” The 10-year’s yield has risen to 4.44%, we ca not allow that to happen!” and they did…
Well, the Fed Reserve St. Louis reported that: “Today, consumers are pushing their shopping carts in warehouse clubs and superstores in numbers that dwarf other types of retail sales traffic.”
Chuck again, no wonder the Retail Sales have been streaky, with one month being OK, and the month being disappointing… I get it, my wife shops a Costco, and when she goes, she buys stuff that will last a long time, and then she doesn’t have to go back for a while…. And she orders her groceries from Walmart… And they deliver them to our front door! Shopping sure has changed since the days that I first started driving, and to use the car on a Saturday, I had to take my dad to work, and then take my mom to the grocery store, and then after picking up my dad I was free to us the family car…. But those trips to the grocery store were something! If you can imagine buying food and planning meals for a family of 7…. And me at that age when they thought I had a tapeworm in my stomach because I could eat a horse! (no horses were eaten or harmed!)
My first car was a Ford Falcon… And do I have some doozie stories to tell about that car… But I’ll save you from all those, and just say that even though I had a car to drive, I still took my mom to the grocery store on Saturdays!
OK… Back to the task at hand… Try to find something to talk about that is fresh and new and doesn’t refer to Trump 2.0 or anything related…. Well, here we go…. The euro has been pummeled in the last 3 weeks, and I guess some of it was warranted, as the European Central Bank cut rates…. Apparently proving that what’s good for the goose isn’t good for the gander, as the Fed heads have cut rates twice, with the first one being a hefty 50 Basis Points cut, and the dollar has done nothing but soar since then…. The euro briefly dropped below the 1.06 handle yesterday, and by the looks of the way it’s trading it won’t be long before it has a 1.05 handle next to it…. A lot will be put into the data this week in the Eurozone, as Euro traders will be looking ahead to Thursday’s EU Gross Domestic Product (GDP) update. The EU’s third quarter GDP is expected to confirm the preliminary print of 0.4% QoQ, and the annualized figure is forecast to show that Europe grew by an unremarkable 0.9% YoY.
That’s sickly growth folks, and I guess the selling is warranted, but C’mon…. It’s not like traders didn’t know that these sickly numbers were in store when they pushed the euro to 1.12 in September! So, most of the rot on the euro’s vine has come from the buying of the dollar, as the euro is the offset currency to the dollar… And we can thank the PPT for most of that dollar buying… But the thing these guys that manipulate the markets try to do is sway the attention of the potential buyer, or short-term holder, and when they succeed like they have this time with the dollar, it’s chilling to me… Ice cold…. like a shot in the back…. I’m just saying…
All the problems that existed in the U.S. economy and our debt picture that were there before the election, that caused the BBDXY to be like Thelma and Louise and edge close to the cliff, and Gold to hit new all-time highs, are still there… It’s just that the market manipulators have decided to not allow the dollar to fall and Gold to soar, for now…. But like I said above, when the selling stops, and it will at some point, then we’ll get back to the task at hand! Did someone sweep the all the problems for the U.S. economy and debt picture under the rug, so the markets can’t see them? No… They still are out there, for all to see, if you care to see them, if you don’t care to see them, then they can’t hurt you! Yes, the markets are like babies….
And a currency like the Norwegian krone, which in normal times is the double recipient of good stuff when the euro is rallying, and Oil is rallying… But in times when the two are in rally mode, the krone gets the snot knocked out of it x 2! The Mexican peso is also seeing a lot of its gains made last year go down the drain, due to the weakness in the price of Oil… And that the new POTUS plans on placing tariffs on their exports to the U.S.
And The Chinese renminbi, talk about getting the snot kicked out of it…. The renminbi was rallying before the election, and had reached 7.08, has fallen back to 7.23…. China will be the first country to have Tariffs placed on their exports to the U.S. and they will also carry the highest tariffs….
I wonder if anyone in the new Administration has associated themselves with the names Smoot & Hawley? It would behoove them if they did…. These two gentlemen introduced tariffs and a year later the world was in a depression… I’m just saying….
The U.S. Data Cupboard today has the STUPID CPI for Rocktober…. And that’s it… The star of the show! The STUPID CPI! I do believe that it will show that inflation bumped a bit higher last month, with the only saving grace being the drop in the price of Oil, thus reducing the price of gas at the pump…. But, I don’t believe it will be enough of a saving grace to help the STUPID CPI, unless of course the BLS decides to massage, roll, and cook the books once again… And since they had to do a mea culpa regarding the way they mis-counted jobs created, I would think they would be on the up an up with everything here on out… Or, at least that’s what I’m hoping!
To recap… The manipulation of the markets didn’t stop on Monday…. Gold lost $21 on the day, and Chuck thinks that all this selling is about to come to an end, for now…. Then Gold can get back to setting all-time highs! Chuck talks about grocery shopping in his youth, and puts everyone to sleep…
For What It’s Worth…. Not much in the way of FWIW article out there this morning, but I did find this article that will make my former colleague and friend, Aaron Stevenson, very happy to read this morning… It’s about the growing problems at Bank of America… And it can be found here: https://justdario.com/2024/11/how-bank-of-america-is-hiding-its-mounting-problems-behind-a-mountain-of-repurchase-agreements/
Or, here’s your snippet: “Finally, the 10-Q of Bank of America has been filed, and it is now time to check how things look in reality beyond the cheerful and “everything is awesome” press release and management call of a few weeks ago when the bank, as expected, beat market expectations (TODAY “EVERYTHING WILL BE AWESOME” FOR BANK OF AMERICA).
As you can understand from the title I chose for this article, Bank of America’s problems are growing, not the opposite. However, I have to admit, at first glance, the numbers looked in better shape until an item usually not that relevant stood out: repurchase agreements.
How do repurchase agreements (aka REPOs) work? In a nutshell, these instruments are generally used by financial institutions to lend or borrow money in the very short term. Usually, the net amounts of money lent and borrowed are fairly the same, and a bank tends to make money using its better credit standing to borrow at a lower rate to then lend at a slightly higher rate to weaker counterparties. The rate is “slightly” higher because REPO operations are always collateralized and often with high-quality government or corporate securities. The typical warning sign of something going wrong with a bank, in particular with its liquidity positions, is when the net amounts borrowed through REPO operations are unusually high.
The amount of liquidity Bank of America borrowed from the REPO market has been DOUBLING in the past 3 quarters to reach a staggering 60 billion USD net balance. How many MSM or Wall Street analysts did you hear flagging this “small” detail? ZERO.
Furthermore, Bank of America isn’t just using REPO agreements to transfer assets off its books and fetch liquidity. As you can read in their own disclosure below, they are doing the same through derivatives using assets that are hard to pledge in the REPO market like non-U.S. Agency MBS.”
Chuck again… those pesky repo agreements again… Remember in Sept. 2019, when the repo agreements were the vehicle that was used the most by the major banks (TBTF)? And then Covid hit and everyone forgot about the repo agreements… Hmmm…. You don’t think that Covid was planned as a diversion, do you? Nah… That can’t be, as there were too many lives lost….
Market Prices 11/13/2024: American Style: A$ .6540, kiwi .5943, C$ .7175, euro 1.0633, Sterling 1.2747, Swiss $1,1345, European Style: rand 17.9781, krone 11.0479, SEK 10.8897, forint 383.39, zloty 4.0785, koruna 23.7882, RUB 98.49, yen 154.62, sing 1.3363, HKD 7.7783, INR 84.38, China 7.2096, peso 20.44, BRL 5.7379, BBDXY 1,280.77, Dollar Index 105.83, Oil $68.48, 10-year 4.39%, Silver $30.95, Platinum $945.00, Palladium $946.00, Copper $4.14, and Gold… $2,609.62
That’s it for today…. Well, remember when I was in S. Florida and was in the hospital for a bleeding ulcer? They told me to make sure I found a GI Doc back home… So, I found one, and today I will see her… Just a howdy and get to know you appt. I just found out that I will be at the hospital next Tuesday morning for scans…. This will be on my jaw for the surgeon to look at to see if he can debulk this tumor… I know, I get to have all the fun times, eh? I just never know when to get off the merry-go-round…. HA! I want to thank all of you who sent me a note telling me how long you’ve been reading and you’re not going to leave…. Eddie Higgins Trio takes us to the finish line today with their version of the song: Hark! The Herald Angels Sing… I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!
Chuck Butler