- Currencies & Metals get taken to the woodshed on Friday
- The ECB cuts rates, and France is under the “unknow” cloud….
Good Day… And a Marvelous Monday to you! A beautiful weekend here in the Midwest was had by all… The rain came at night, and the days were warm with little humidity… The calm before the storm weather-wise as I see it…So, I finally broke down and watched a Battlehawks football game yesterday, as Steve McCroskey said in the great movie: Airplane… I picked the wrong day to stop sniffing glue, no wait! I mean I picked the wrong day to watch a St. Louis team play football… The Guess Who greets me this morning with their song: Share The Land…
Well, last Friday was an engineered takedown to beat the band… I had really thought to myself that these days were over, and not to be seen again, and then to my surprise, the short paper traders saw to it that their on paper losses were taken care of… UGH! Oh, well, we might as well get into all of that, so here we go!
Gold and Silver got whacked with a great big stick on Friday… Sure the markets took the jobs report, hook, line and sinker, but the major part of the selling of the metals was in the short paper trades… Gold lost $83 on Friday, and Silver lost a whopping $2.14… It was a very ugly day, for the metals, and the short paper traders were waiting in the weeds for a data print that would show how rates were going to remain higher, longer so they could take the metals down… BIG TIME
So, lets dive into the trumped up BLS jobs report from last Friday… The BLS reported that 272,000 jobs were created in May… I mean C’mon, BLS, you really don’t think that your report is believable do you? The Birth/ Death calculation that was added to the total from the surveys of added jobs, showed that 231,000, were added from an Excel spreadsheet, or out of thin air, whichever you care to vision it. That means the surveys from businesses only added up to 41,000 jobs…
I read a report on Zerohedge.com that quoted the Bank of American economists that said that the Birth / Death Model has added an extra 100,000 jobs per month… Well, last month it was 231,000, and for the last two months added together the addition is 594,000 jobs added…
So, how does the BLS explain how they showed that many jobs created in May, when the Unemployment Rate for May rose to 4.0% (from 3.9% April)?
I just can’t explain the BLS’s rigging of the jobs report any better… But maybe this will help: Consider this: the BLS reports that in May 2024, the US had 133.3 million full-time jobs and 28.0 million part-time jobs. Well, that’s great… until you look back one year and find that in May 2023 the US had 134.4 million full-time jobs, or more than a million jobs than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by more than 1.5 million since May 2023. I just sit here in amazement that the markets took the report and ran with it… I also shake my head in disgust…
The dollar saw a HUGE upward movement from the Jobs Jamboree, with the BBDXY gaining 10 index points on Friday! But when you look at the currencies, they don’t show the effects of this 10 index point gain in the BBDXY… The euro still holds the 1.08 handle, and the rest of the currencies are still alive… The Petrol Currencies are the ones that showed a hit of small proportions… The Mexican peso was a drop to an 18 handle, and the Russian ruble slipped back to an 89 handle. Remember these are what’s called European priced currencies, so as the number go higher, they are losing ground to the dollar.
The Petrol Currencies saw their current handles taken out after the Price of Oil slid to a $75 handle on Friday… Our friends (NOT!) over at OPEC have to be wondering just what the hell happened on Friday? I say that, because that’s what I was doing…
And the 10-year saw major selling on Friday… The 10-year’s yield rose to 4.44%, on the “higher, longer rate talk”…
In the overnight markets last night… The dollar got bought some more with the BBDXY showing a gain of 3 index points to start our day/ week… Higher and longer for rates seems to have finally caught the markets attention… And that leads me to say something that I don’t want to say, but will… The Fed Heads have always liked to surprise the markets… So, could they be like Bullwinkle and have something up their sleeve for this week’s FOMC meeting? I doubt it, and come to think of it, Bullwinkle always showed that he didn’t have anything up his sleeve!
Gold is attempting to put the pieces of its year-long rally back together this morning, and is up $7 to start our day/ week, with Silver gaining back 57-cents to start our day/ week. The 10-year saw some additional selling overnight, and the yield on the 10-year starts the week at 4.47%…
And the price of Oil remained in the $75 handle… You know, in my humble country boy opinion, the time to back up the truck and gas up, is now, while the getting is good with gas prices… I fear that they won’t be this cheap for too long… I’m just saying…
The Big Dog euro, saw some selling pressure from last week’s goings on in Europe.. First, we saw the European Central Bank (ECB ) cut their internal rate 25 BPS to 3.75% on Thursday last week… I was really hoping that the ECB would see through the latest reduction of Inflation and hold steady, Eddie on rates, but they didn’t, and now the euro has to suffer from their uncalculated, risky rate cut…
And Second, the election in France has caused some dark clouds to come over The French President, Macron… And what have I always told you that traders don’t like? Unkowns… And that word is floating over France right now, and the euro has to suffer from that too… I’ve got something related to this thought in the FWIW for you this morning, so don’t change the channel just yet!
With the euro backing away from the 1.09 handle, that it came so darn close to last week before the rate cut news, the rest of the currencies are starting the week on a down note… The U.S. dollar is the king of the hill once again, or as I described it many years ago, the cleanest shirt in the dirty clothes…
I’ve been talking about Copper quite a bit for the last two years, highlighting the lack of supply VS demand, and the run-up in Copper’s price… So, when I saw this article Titled: “Copper: Is the correction the end of the rally” on barchart.com, I was intrigued… Here’s a short snippet from the article: ” I asked if Copper was heading for a new record high. The nearby July COMEX futures price was at the $4.6255 level on May 6, and the bullish trend threatened to challenge the March 2022 $5.01 high. I highlighted that the technical trend, climate change initiatives, and production struggling to keep up with the rising demand presented a compelling bullish case for copper.
Copper’s correction from its most recent high has not negated the long-term bullish trend. The odds continue to favor even higher highs over the coming months.”
Chuck again… The article goes on to talk about the futures market in Copper and how the futures market has Copper price above $5… So, that’s a good indication of where the spot of Copper will be headed… I’m just saying…
Copper, along with lumber, Gold, and Oil are good indicators for a commodities rally…
OK, I’ve gone on too long this morning, time to head to the Big Finish…
The U.S. Data Cupboard was full lies late last week, so we’ll just move on to this week’s Data Cupboard, which will have the STUPID CPI report for May on Wednesday this week… And quite frankly, the markets are so spell-bound by the STUPID CPI that the direction of the dollar, and Gold will be decided by the direction of that report… So, get ready… Strap yourself in, and make certain that no arms or legs are out of the carriage…
Oh! And Wednesday this week will be the June FOMC meeting to discuss interest rates… There are still calls out there for a rate cut at this meeting, but I think the Fed Heads would be slipping the noose over their collective heads if they cut rates after what the market believe was a moon shot jobs report last week… I’m just saying…
To recap… The BLS fed the markets lies, on Friday, and that got the dollar bought, and Gold Sold, which would have been just a normal run-of-the-mill correction if it weren’t for the short paper traders who walloped Gold & Silver beyond recognition… It was UGLY! Copper’s correction is not the end of the rally… The price of Oil got taken to the woodshed too… With only the dollar shining brightly on Friday…
For What It’s Worth… Ok, I tempted you to remain on this channel, and so now I must deliver! This is an article that talks about how will the markets swallow all of the bad news that’s hitting the news every day, and it can be found here: Credit Bubble Bulletin : Weekly Commentary: Summer of Discontent and Instability
Or, here’s your snippet: “It was another important week – and I’m not referring to Nvidia’s market cap surpassing Apple’s to reach $3.0 TN (or Roaring Kitty’s podcast touting GameStop attended by 600,000). There were market-surprising/shocking election results in Mexico, India, and South Africa. Volatility was notable across international markets. The ECB and Bank of Canada cut rates this week, with markets seeing the global central bank community’s easing cycle now underway. And Friday, another stronger-than-expected Non-Farm Payrolls report rattled the bond market. Could there possibly be a common thread?
The Mexican peso sank 7.2% this week, with over half the loss on post-election Monday. Mexican stocks (S&P/BMV Index) were slammed 6.1% in Monday trading. Indian (Nifty50) equities were hit 5.9% in Tuesday’s session.
June 6 – Bloomberg (Ezra Fieser): “Early Monday morning, one of the world’s most profitable currency trades unraveled, done in by a twist in Mexican elections few saw coming. Twenty hours later, investors in India started frantically dumping stocks, triggering a one-day, $386 billion wipeout, when they realized they had badly miscalculated the scope of Narendra Modi’s election victory. Around the world, surprise results in some of the biggest developing countries are illustrating how much markets have riding on the politics of 2024… From Mumbai to Mexico City, the Year of the Election — in which 40 countries are holding national votes — is already burning investors, providing an early warning as elections in the European Union and UK near, and five months ahead of the US presidential contest.”
Highly speculative (and levered) markets don’t mix so well with voter acrimony. Importantly, speculative Bubbles and public enmity are not coincidental. They are inevitable consequences of inflationism and monetary disorder. Given enough time, policies so revered by the markets will be viewed with increasing disdain by the masses. Wealth inequalities become only more pronounced late in the cycle, creating a sprawling divergence between market euphoria and deepening public dissatisfaction. Political class market embracement/accommodation at some point shifts to the appeasement of ever more powerful populist movements. Markets this week at least acknowledge the unfolding power-shift to disgruntled electorates.”
Chuck again… this article is written by Doug Noland, of whom I’ve quoted him several times through the years in the Pfennig… So, he’s no stranger, and he’s hit a nail on the head here…
Market Prices 6/10/ 2024: American Style: A$ .6592, kiwi .6107, C$ .7267, euro 1.0747, sterling 1.2709, Swiss $1.1190, European Style: rand 187853, krone 10.7853, SEK 10.5523, forint 366.52, zloty 4.0253, koruna 22.9186, RUB 88.89, yen 156.90, sing 1.3531, HKD 7.8136, INR 83.51, China 7.2417, peso 18.43, BRL 5.3460, BBDXY 1,265.80, Dollar Index 105.28, Oil $75.84, 10-year 4.47%, Silver $29.72, Platinum $968.00, Palladium $919.00, Copper $4.52, and Gold… $2,300.60
That’s it for today… My beloved Cardinals fell back into their old habit of playing to the level of their competition… There’s no other excuse that can be used here… Hey! There will be no Pfennig next Monday and Tuesday… I’ll be going in for my heart procedure on Monday, and won’t be back home until Tuesday… So, I’ll do my best to pump as much info as I can into the Pfennigs this week… This coming Sunday will be Father’s Day… Longtime readers know my fondness of my dad… This is an alert to you to give your dad something other than a tie! Chicago takes us to the finish line today with their song (and my fave Chicago song!) Hard Habit To Break… I hope you have a Marvelous Monday today, and that you will Be Good To Yourself!
Chuck Butler