- Dollar drifts at sea…
- U.S. Debt is like a frog in boiling water…
Good Day… And a Marvelous Monday to you! Well, we had visitors this past weekend, good friends, Gus and Diane, were here, and well, the weather didn’t cooperate… It was overcast, rainy and chilly… I know it seems strange to say chilly when it was 72, but… without sunshine, it was… The National College Football Championship game is tonight… Good luck to the teams, that are playing, Michigan and Washington… I would like to see Washington win, as I’m still on the fence as to whether Michigan should have been allowed to play in the playoffs to start… The Rascals greet me this morning with their hit song: A Beautiful Morning…
Well, after a hell bent and whiskey bound start to the year, the dollar kind of backed off all the buying as the week ended… On Thursday morning, the BBDXY was 1,223.71… On Friday at the close the BBDXY was 1,224.14… So, the dollar was up less than 1/2 index point. The PPT had gone back into their cave, where they had crawled out of to intervene in the currency markets once again, last week. It’s getting to be a bad habit, that whenever the dollar begins to fade, and it appears the markets want to take it lower, the PPT steps in and buys dollars, with their Treasure Trove of : Exchange Stabilization Funds… One of these days the PPT’s well will run dry, and then who’s going to be there to save the dollar?
The price of Gold gained $2.10 on Thursday, and $2.20 on Friday, to close the week at $2,045.60… Silver saw a small gain of 2-cents on Thursday, and 18-cents on Friday to close the week at $23.19. Both metals were much higher both days, only to see the short paper traders enter the markets and reduce the gains the two metals had booked intraday. Again, one of these days, the short paper traders will have to eat their short trades, and take losses, and back out of their Ponzi Scheme, and when that finally happens, to the moon, Alice! I’m just saying…
The price of Oil ended the week at $72.87, just a short hop, skip and jump from the $73 handle… the price of Oil has seemed to settle in right around $70-$73 for now… Biding its time before exploding higher… Well, that’s what I see for the price of Oil, what do you see?
The 10-year moved back above the 4% yield level on Friday… The Jobs Jamboree which was lies, and more lies, said that 216,000 jobs were created in December… I would have to think that a majority of those jobs were temporary seasonal work… Now that Santa isn’t needed in the Food Court at the Mall any longer, he’ll be showing up for unemployment again… And that goes for Mrs. Claus in the bakery dept too!
Anyway… the Jobs Jamboree basically told the bond boys to “wait, a minute, and not go so fast on that rate cut talk”… And so bonds got sold once again…
In the overnight markets last night…. Oh my…. What are the short paper traders doing this morning? They have Gold down $25 in the early trading today, and Silver down 28-cents! Serenity now! I know that I said long ago that I wasn’t going to get upset with the dirty rotten scoundrels any longer, but this really got to me this morning… There’s no dollar rally going on, there’s no bond market rally going on, and the geopolitical problems seem to be escalating daily, but Gold can’t find a bid? Give me a break! This is so brazen and bold, that I do have to give the short paper traders credit for their intestinal fortitude!
So, like I said there’s no dollar rally going on, the BBDXY is up just a smidgen this morning, and with no real economic news on the docket this morning, that’s the direction of the dollar for today… adrift at sea…
Well, here’s a little ditty that seemed interesting to me… This is from Bloomberg.com “Non-commercial traders — a group that includes hedge funds, asset managers and other speculative market players — added to their short positions on the dollar in the week ended Tuesday, according to CFTC data compiled by Bloomberg. Roughly 96,800 contracts worth almost $10 billion are now tied to expectations that the US currency will fall, up more than 26,000 from the previous week and the most bearish since late August.”
Chuck again… Well, with the way the dollar began the year, on a tear, these boys and girls are probably second guessing their short positions… But not to fear, I’ve seen the dollar begin years strong before, and then suddenly fade, and truly expect that to happen again in 2024….
And after last week’s Jobs Jamboree, I would have to say that either the Fed Heads will have to delay any rate cut this year, or have to admit that they never were worried about the strong jobs market, and wage induced inflation… Now, which one do you think the Fed Heads will choose? Thank you Bob Barker, I’ll take what’s behind door #1… I was asked this question a couple of weeks ago regarding the Fed Heads potential rate cuts… I said then and I still stand by that statement, that I didn’t think the markets were correct in thinking that the Fed Heads would cut rates as soon as March 2024… I said that if anything, the earliest a rate cut could come is June, and by then who the heck knows what will be the financial situation in the U.S.? Chances are, because I wear a silly grin, no wait! That’s not where you were going, Chuck! Chances are the rate cuts will not materialize in 2024… Then what happens to the dollar?
I came across this headline in the Business Insider.com “The $34 trillion mountain of national debt is a ‘boiling frog’ situation for the US economy, JPMorgan warns”…
Yes, that’s the old adage about how if you put a frog in a pot of boiling water, he’ll jump out! But if you put him in a pot of warm water, and slowly turn up the heat, he will get boiled… So, what JP Morgan is saying here is that the debt is slowly turning up the heat on the economy… YIKES! You know, that when you hear a Big Box Broker/ Casino Bank talking about problems for the economy and debt, you know that there is a real problem out there! I’m just saying…
The U.S. Data Cupboard on Friday had the aforementioned Jobs Jamboree… In addition the Jobs report showed that there had been a 4.1% increase in Hourly Wages in the past year… Well, if we use the real inflation data that John Williams computes for us that says that Consumer Inflation is running around 8%, then we can clearly see that wages aren’t keeping up with inflation… And that’s not good, folks… How long can U.S. Consumers keep reaching into savings, or running up debt on their Credit Cards, before this all comes crashing down? I don’t know the answer to that question, but if I took a stab at answering it, I would say not past this year… Uh-Oh!
The U.S. Data Cupboard this week, doesn’t have a lot of real economic data to print, until we get to our Tub Thumpin’ Thursday, when the Stupid CPI will print… Right now the so-called experts have CPI increasing month to month at .2%, and annualized CPI increasing .2% to 3.3%… See what I mean about how this report is plain Stupid? Calculated without hedonic measures, John Williams at www.shadowstats.com compute CPI at 8%… not 3.3%… I’m just saying…
To recap… The dollar started the year last week on a tear… But by the end of the week, it was scratching and clawing for any upward movement, which turned out to be not really coming… Gold finally got its head above water on both Thursday and Friday last week, albeit by small amounts. Chuck points out that the non-commercial traders have built a strong long position in Gold… So, something has to shake out of this situation folks…
For What It’s Worth… The good folks at GATA sent me this on Sunday, and while reading it, I decided to feature it in my FWIW article today. This is an article about how Gold has outperformed stocks and bonds since the turn of the century, and it can be found here: Gold still outshining stocks and bonds since the turn of the century | Morningstar
Or, here’s your snippet: “Stocks outpaced gold in 2023, but the yellow metal still posted stronger annualized returns since the turn of the century, according to S&P Dow Jones Indices
No yield, no dividend, no problem?
That appears to be the case for gold when it comes to its performance against both stocks and bonds as the calendar flips ever deeper into the 21st century. The chart below from S&P Dow Jones Indices shows the relative performance of the yellow metal, as measured by Dow Jones Commodity Index Gold, versus the S&P 500 SPX, between Dec. 31, 1999, and Dec. 29, 2023.
Unlike some stocks, gold – like other commodities – pays no dividends. Unlike bonds, it pays no coupon. That’s often described as raising the opportunity cost of holding gold versus assets that produce some sort of yield. Still, DJCI Gold, which is designed to track the market via futures contracts (GC00), has outpaced both since the turn of the millennium.
Going back to the start of the century, DJCI Gold produced a 7.8% annual return, compared to a 7% return for the S&P 500 during that time, said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a blog post this week.
Adjusting for volatility, gold has provided slightly better risk-adjusted returns than stocks, with a Sharpe ratio of 0.48 versus 0.45 for equities, Luke wrote. The ratio compares the return on an investment with its risk.
Bonds aren’t even close when it comes to annualized returns. The iBoxx USD Overall Index, which measures investment-grade government and corporate bonds, has seen an average return of 4.1% since 1999, according to Luke, though its Sharpe ratio is slightly better at 0.89.”
Chuck again… Well, I had always suspected that to be true, and now I have the data and the facts to prove me correct!
Market Prices 1/8/2023: American Style: A$ .6683. kiwi .6216. C$ 7470, euro 1.0938, sterling 1.2705, Swiss $1.1741, European Style: rand 18.7429, krone 10.4218, SEK 10.2864, forint 345.29, zloty 3.9753, koruna 22.3997, RUB 91.06, yen 144.56, sing 1.3325, HKD 7.8073, INR 83.13, China 7.1623, peso 16.88, BRL 4.8889, BBDY 1,224.98, Dollar Index 102.49, Oil $73.06, 10-year 3.05%, Silver $22.91, Platinum $954.00, Palladium $1,017.00, Copper $3.80, and Gold… $2,020.18
That’s it for today… Well, our friends go home today… so sad… back to the cold of the north! I saw where the St. Louis region got a dusting of snow last week… I get the feeling that the weather pattern is about to change again, and we’ll start having colder winters up north, with more snow… The NFL Playoffs are set, and start this coming Saturday… Why on earth are some of the playoff games only on Peacock, a streaming station? I do believe that the NFL is shooting themselves in the foot on this… I’m just saying… Our Blues have won 2 games in a row… They changed their head coach, and they seem to be playing better… Go Blues! And there are 38 days until pitchers and catchers report to Spring Training! The countdown has begun! For me at least! HA! Doucette takes us to the finish line today with their song: Mama Let Him Play… And with that I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!
Chuck Butler