Author: admin

November 15, 2022

* Currencies & metals get sold early, rally late

* Overnight the dollar gets sold… 

Good Day! And a Tom Terrific Tuesday to you! Well, as you can tell, the Pfennig is a little later this morning than usual… The alarm went off, and I went right back to sleep, for I had a rough night, with my stomach… No biggie, just chemo stuff… I’m good to go today! I’m glad that years ago, I decided to take my chemo at night, so that if I had problems, they were during the night, and not during the day, when I needed to work, etc. From those dark days of a few years ago, when I was curled up in chair, and didn’t want to move, to these days, when I’m up moving, and going places… I have to say there’s a HUGE difference… The Stephen Kummer Trio greet me this morning from their album: Christmas In The City, and their song: When My Heart Finds Christmas…

Well, yesterday, was a strange one… The day started with the dollar being bought, and the BBDXY Index up 5 index points, and Gold down $12, and had all the inklings of a bad day for the currencies and metals, but that never came to fruition… And all day the currencies & Gold fought back, and at the end of the day, the BBDXY was up 3 index points, and Gold had turned that negative $12 loss into a 30-cent gain! I know, 30-cents is a long way from the $49 gain Gold had last Thursday, but hey! It was positive, and not negative, right? The euro remained above $1.03, and the Aussie dollar (A$) climbed over the 67-cents handle, and kiwi climbed over the 61-cent handle… These two have been the fastest moving currencies VS the dollar since last Thursday…  Yen has wrapped a tourniquet around the bleeding it has been experiencing for over a month now, and has rallied nicely VS the dollar… There’s something there that I have to say, that’s not good about either currency… you know the dollar was getting sold widely, when the yen rallies…

So, Gold ended the day at $1,72.60, and Silver ended the day at $22.08… That’s the first time we’ve seen Silver back over $22 since 2014… I know that couldn’t be right, no? Well, according to the dollar/ Silver chart I looked at last night, it was 2014…  Any way, it’s been a long time for Silver to get back into the game… Of course $22 is not what you and I would pay for Silver these days… The premiums are still outrageous, indicating the lack of supply in Silver… And it illustrates a picture that I’ve tried to paint for you previously, and that is… When the stars are aligned and the karma is flowing, and physical Gold & Silver are getting bought by the masses, the supply will become drained, and the premiums, if they are outrageous now, will be more than outrageous… So… What are you waiting on?

The price of Oil slipped again and ended the day trading with an $85 handle… That’s not the direction for Oil that our friends (NOT!) at OPEC wanted to see for Oil… Ahh, the best laid plans of mice and men, eh? I think they need to look further out on the horizon to see Oil climbing in price once again…

The 10-year’s yield rose yesterday and ended the day with a 3.88% yield. I told you yesterday, that I thought that calmer heads would come to the head of the class, and calm things down, an that is what it appears to have happened.

The overnight markets last night…  The dollar was sold to the tune of 9 index points off of the BBDXY dollar index. The euro is trading above 1.04 this morning, and the yen is moving in the right direction too. Gold is up $4 in the early trading today, while Silver sees some profit taking moving it back below $22 this morning with a 22-cent loss.  The price of Oil has slipped again, and trades this morning with an $84 handle, and Bonds are drifting… So, I guess that Oil’s future is all dependent on the timing of China’s opening / ending their zero Covid. You may recall that when it was rumored that China was going to open up, that all the anti-dollar assets, including Oil rallied strongly…

Well, I wanted to talk about this yesterday, and then plum forgot…Another “senior moment”…  Remember John Corzine? He of the Wall Street golden boys, and went to start his own firm, only to have the whole thing blow up in his face, as he was guilty of taking client funds and trading them like the Company’s money… And after all the shame was placed on him, a few years later, he ran and became the Gov. of New Jersey!

The reason I bring this up, is that the FTX, let’s call him SBF, stared the crypto clearing company, and then began to move client funds to his trading partner firm…Sound familiar? Oh, and now there’s $1-$2 Billion missing… Wait! What?  Yeah, it’s missing… And probably lost in the market…  So, and bets on whether SBF is absolved of his crimes, in few years?    I would almost bet on that one!

One of the things that propel inflation higher is “expectations”.. People believe that the prices they are going to pay for a new car will be higher in a couple of months, so they rush out to buy it now, and that propels inflation higher.. .So, expectations are very important to the Fed Heads when they look at inflation… I’ve told you before that the Fed Heads don’t really pay attention to the stupid CPI, but instead follow the PCE (personal consumption expenditures), and the expectations…  Well, a day after the stupid CPI printed, the preliminary November data showed that inflation expectations rose for the second straight month with 1-year expected up from 5.0% to 5.1% and 5-10Y expected up from 2.9% to 3.0%

I know, if you’re like me, Lord help you!, You are laughing at the irony of these reports… The Fed Heads and their expectations of inflation… So, did you ask yourself this question, like I did, “I wonder when they began to expect inflation when they flatly denied it existed a year ago? “

Recall that I drew the picture for you sometime back, about how eventually, these rising prices will get to a breaking point, and when they do, that’s when the mobs of people show up at the Eccles Bldg., and demand the Fed Heads… I said that back when Sri Lanka was throwing their leader out, for allowing inflation to soar in that country… Well, news this past weekend had worker in Greece and Belgium striking because their wages aren’t keeping up with inflation… See, how this all reached a boiling point? We, as a country, are more tame than other countries, but still… there will be plenty of people at the boiling point that need to vent their frustrations…

The city of St. Louis, is getting an MLS expansion team… This has been in the works for a couple of years now… Thanks to my former colleague and good friend, Ty Keough, I’m a part of the initial season ticket holders’ group for the new team that will begin play in Feb…  Those could be some really Cold games, brrr…   And I won’t be here to attend them! Rick? You’re up buddy!

St. Louis City FC…  not exactly a fancy name, but I think it works…

OK, back to the markets… Hey! I’ve got to have those breaks to clear my mind for a minute or two, and then pick it up again.. .So… here we go….  This past weekend I saw a Twitter comment from Sven Nordgren, of whom I’ve quoted before,  so I had to check it out to see what he was referring to… And this is it… read this slowly so you get what I’m aiming for: “FED’S WALLER: THE FED WAS CAUGHT OFF GUARD IN 2021 WHEN INFLATION APPEARED TO MODERATE BEFORE EXPLODING.”

Well, I’m with Sven on this one as he replied “That’s utter Bull238#: How can you say things like that with a straight face? I would be laughing out loud and spewing spit all over from how riotous this statement that they made me make! 

Maybe you got a little too descriptive there Chuck?   Oh, well.. I’m sorry if I disgusted anyone, it’s not the first time nor the last time I will do that!

I found this on zerohedge.com last weekend… “In all the chaos over the past few days, we missed the release of the Fed’s latest Senior Loan Officer Survey which came out Monday. The results were striking: as one would expect from an economy in recession (and in some cases, depression), in nearly all categories, banks are reporting both tighter lending standards and sliding demand for new loans — and nowhere more so than in mortgages, both qualifying and otherwise, where demand has collapsed to “depression” levels as a result of the fastest every surge in interest rates.

But loan supply and demand aside, the punchline from the survey is that “most banks assigned probabilities between 40 and 80 percent to the likelihood of a recession in the next 12 months, with no bank reporting a probability less than 20 percent. Although banks in general assigned relatively high probabilities to a recession occurring in the next 12 months, most banks reported expecting the recession to be mild to moderate, should one occur. In addition, most foreign banks assigned a probability between 40 and 80 percent that a recession would occur in the next 12 months.”

Chuck again… just another in our collection of signs of a recession…

The U.S. Data Cupboard just has the Producer Prices Index (PPI) for Rocktober for us today, and it should continue to show that wholesale inflation is still perking along and sending higher prices to the retail operations… Tomorrow’s Data Cupboard is the big print of the week, with Retail Sales for Rocktober… So, until then, we have to make do with PPI…

To recap… The day began yesterday with the dollar getting bought, and Gold down $12, but the day ended with the dollar only up a bit, and Gold closing the day with a 30-cent gain Maybe calmer heads prevailed yesterday… I guess we’ll have to continue to monitor the trading each day, like I don’t do that any way!

For What It’s Worth… Well, a couple of years ago, I used to write a monthly letter for the Aden Sisters, Pamela, and Mary Anne, and in one of those letters I wrote about how the Central Banks were loading up with U.S. stocks, and pointed out that the Swiss National Bank (SNB) had really taken the Nestea plunge into U.S. stocks.. .Well, this article is about how they are now unloading those stocks… Uh-Oh… and it can be found here: https://wolfstreet.com/2022/11/11/the-swiss-national-bank-began-unloading-its-biggest-us-stock-holdings-incl-apple-microsoft-amazon-alphabet-meta/

Or, here’s your snippet: “The Swiss National Bank has spent years creating Swiss francs, buying dollars, euros, and other currencies with those francs, and then buying assets denominated in those currencies – including a vast portfolio of US stocks.

But that gig is up, it seems. Asset prices have fallen sharply, and the SNB is unloading. It doesn’t disclose details on its balance sheet, but it has to disclose its US stock holdings in quarterly regulatory filings with the SEC, and it now filed its Form 13F for its Q3 holdings. We’ll get to those in a moment.

The total of “Foreign currency investments” on its balance sheet – which includes US stock holdings plus its other foreign currency investments – peaked in February 2022 at CHF 977 billion ($1.04 trillion at today’s exchange rate). By the end of September 2022, they’d plunged by 17%, or by CHF 160 billion, to CHF 808 billion, the lowest since March 2020:

The composition of the CHF 160 billion plunge in its holdings is a mix of market prices, asset sales, and exchange rates of the CHF to the currencies involved.

From the SNB’s filings of Form 13F with the SEC, we can see that the SNB not only took losses from the price declines of its US stock holdings, but that it also sold down most of its largest positions, reducing the number of shares it holds in Apple, Microsoft, Alphabet, Amazon, Meta, etc.

From June 30 through September 30, the value of the SNB’s US stock holdings fell by 8.0 billion, or by 5.4”.

Chuck again… Well, I love it when a thought comes to fruition… you see in that letter about the SNB buying stocks I wrote about how when the stocks finally turn around, that the SNB would incur losses… of great magnitude, since their holding were HUGE!

Market Prices 11/15/2022: American Style: A$ .6748, kiwi .6158, C$ .7535, euro 1.0429, sterling 1.1956, Swiss $1.0429, European Style: rand 17.1947, krone 9.9235, SEK 10.3717, forint 389.83, zloty 4.5075, koruna 23.3222, RUB 60.57, yen 138.62, sing 1.3672, HKD 7.8267, INR 81.10, China 7.0378, peso 19.26, BRL 5.3260, BBDXY 1,2868.40, Dollar Index 105.81, Oil $84.82, 10-year 3.80%, Silver $21.86, Platinum $1,036.00, Palladium $2,094.00, Copper $3.77, and Gold… $1,776.01

That’s it for today… Tomorrow night we’ll have two soccer games in town… The City 2 team (mnor league) will play a team from Germany at our brand spanking new stadium, while across town the St. Louis U. Billikens men’s soccer team will play a 1^st round game in the NCAA Tournament. Our Blues have closed the book on their 3^rd period collapses, as they traveled to Colorado to play the defending Stanley Cup Champions last night and won!  Let’s hope they never revisit that chapter!   I’m waiting on any news of a Cardinals’ player acquisition… Free Agent signee, trade, waiver wire transaction, anything to keep baseball on our minds… Jack Jezzro takes us to the finish line with a song from his album: Bossa Nova Christmas, Home For the Holidays… I hope everyone can be near family at Christmas… I’m just saying… I hope you have a Tom Terrific Tuesday today, and please, pretty please with sugar on top, Be Good To Yourself!

Chuck Butler

November 14, 2022

* currencies & metals soar on Thursday & Friday 

* Consumer Debts begin to pile up… 

Good Day… And a Marvelous Monday to you! Man, it got cold here this past weekend… Have I told you lately how much I abhor cold weather? I don’t like winter coats, scarfs, gloves, etc. while it never got above 40 here, it was 80 in S. Florida, where my wife is… Why on earth am I still here, I asked myself?  Our Blues have seemed to have righted the ship, and have won two games in a row… That was a tough time to be a Blues fan, during their 8-game losing streak… My beloved Mizzou Tigers hung with the highly rated Tennessee team until late on Saturday, when the Vols decided to run up the score on the Tigers… We’ll just put that in our memory bank, and it will come back to them one day…   The Stephan Kummer Trio greets me this morning with their version of the song: My Favorite Things…

Well, bust my buttons! The dollar sure went into a free fall last week… After range trading for the fist part of the week, the BBDXY saw the index number begin to pile up in a negative way, once the stupid CPI printed on Thursday morning. So, let’s talk about this right here and now…  The stupid CPI showed that inflation had dropped from 8.2% to 7.7%, and you would have thought that it had dropped to 2%, by the way traders and investors reacted! Stocks soared, Gold Soared, and the dollar got sold. I’m not buying into the frame of mind going through the markets right now, that inflation is on its way down, and all will be right in the U.S. I know these people don’t read the Pfennig, otherwise they would know that the stupid CPI is just that… Stupid!

So, the BBDXY lost 26 index points on Thursday, and then followed that up with 17 index points lost on Friday, totaling 43 index points to close the week that the index lost, closing on Friday at 1,275.89. With the dollar getting sold like funnel cakes at a State Fair, Gold was the beneficiary… Gold gained $49 on Thursday and followed that up with a gain of $15 on Friday. Silver got into the fray, with a gain of 63-cents on Thursday, and then just 3-cents on Friday. I’m sure there were tons of shot Silver futures contracts/ paper trades to deal with on Friday…

The currencies saw some love thrown their way for the first time in a month of Sundays… The euro rallied to trade at $1.03…  The Aussie & Kiwi dollars really got bought, because of their interest rates structures compared to the rest of the world, and so it was, that they were sought out by traders and investors. So, is this the end of the strong dollar trend?  Well, I think that this week will tell us if that’s to be… If we continue to see dollar selling this week, after the dust has settled on the stupid CPI from last week, then we can be somewhat assured that this is a new trend, if we don’t see more dollar selling this week, then we can be somewhat assured that either 1. The PPT has stepped in to protect the dollar, or 2. Calmer heads have stepped in, and don’t believe inflation is tamed, etc.  

You see… that IF the Fed were to take the bait and cast their line into the “no more rate hikes pond”, it would allow inflation to grow even faster, and then when the Fed realized their mistake they would have to recover quickly, and aggressively… The markets at that point would be so through with the Fed, that they would take it out on the dollar…  I really do think that these “inflation is tamed so the Fed won’t need to hike rates further” folks, are going to get their rear ends handed to them…

The price of Oil gained $1 on Thursday and $2 on Friday, to end the week with an $88 handle… And it was never so clear or illustrated so well, that traders believe inflation is tamed, and that the Fed won’t be hiking rates again, than the trading of bonds… The 10-year’s yield dropped to 3.81%… That’s a ton of buying, folks… trust me on that, I used to sit on the bond Trading desk at Mark Twain Bank, and would watch the movements in Bonds… It takes a lot of buying or selling to move yields like that…

So, to me, if the traders and investors want to think that inflation is tamed, go ahead… I’ll be sure to point out how wrong you were, at some time in the future…

In the overnight markets last night, the selling of the dollar ended, with the BBDXY gaining 5 index points last night. But 5 index points aren’t going to move the currencies off their newfound levels. Gold is seeing some selling in the early morning trading, with Gold down $12, and Silver down 28-cents… There had to be some profit taking going on, and I think that this will iron itself out, as we go along… I’m sure the Fed Heads that will be out speaking in the coming days will be talking about how inflation pressures are slow to move, and that they will remain vigilant in their attempt to bring inflation back to 2%… At least that’s what I would be doing if I were in their shoes… No, wait! There’s no way I would be in their shoes! I would be shunned by the other Fed Heads, for being the rebel rouser, always voting opposite of the way they vote… Well, come to think of it, that may be fun… I’ll have to think on this some more…

OK… I know that most of your dear readers are of the same thoughts that I have that we’re doomed, to face a change of our monetary system, as we have beaten and destroyed this one to beyond recognition… But I look around and people are still spending money on gee gaws, and tchotchkes, and everything else that’s out there, and I wonder, “how in the world do they have that kind of disposable income, after paying for food, energy, housing, and cell phones?”  And then I see this data from the Federal Reserve Bank of St. Louis (FRED)… During the second quarter of 2022, credit card debt in the US rocketed to $887 Billion outstanding, up a whopping 13% since the same period last year. All in, total household debt is up 2% from Q2, 2021, an increase of $312 Billion to $16.5 Trillion. 

Mortgage balances, too, were up $207 Billion over the same period, totaling $11.4 Trillion as of the end of June.

In case you didn’t notice That’s a Billion and a Trillion with capital B & T!  And I know what’s on the mind of these folks running up their credit card accounts… At some point, the amount of credit will be so large that and underwater that the Gov’t will have to bail them out… I wouldn’t be hanging my hat on that happening any time soon, and in the meantime, these folks will be paying 19% interest on their debit balances… I don’t see how this ends without tears… I’m just saying…

Speaking of getting what you deserve… Nah, I don’t want to go here… I was going to talk about how the young folks voted, but I decided not to…let’s move on, here for these are not the droids we’re looking for…

Well, the news from La-La land last week was not good… Facebook, I mean Meta laid off 11,000 workers, and Twitter’s new boss handed out a lot of pink slips, and then there was this bit of news that really should be shaking the foundations of a strong economy… As FreightWaves reports, truck brokerage giant C.H. Robinson Worldwide Inc. is laying off between 1,000 and 1,200 employees, most of whom are at the vice president and general manager level, according to sources familiar with the situation. I’m sure there are many more to report here, but just the fact that Twitter, et al were axing people, should tell you where this is going…

OK… longtime readers know that I have a special place in my heart for the Canadian Loonie… Well, that is, did have a place… I learned this week something that I know I heard about back in the day, but didn’t think too much about, and that is that Canada sold all of its Gold holding back in the early 2000’s… This is from the website The record.com, but you have to subscribe to read it, so it’s onto what I could pull…

“Canada sold all of its gold holdings over the past 20 years, mostly at rock bottom prices in the early 2000s, much to the astonishment of the “hard-money” crowd and almost anyone who has read a book on economic history.

In a May 2022 interview with Kitco news, former Bank of Canada (BoC) Gov. David Dodge explained the reasoning behind the bank’s decision to off-load its gold holdings. “The issue is quite clear, that it costs to hold gold, whereas holding U.S. or Chinese or Euro bonds yields you a return,” said Dodge. “That was a strong view. And a view that our international monetary system was in a place that was sufficiently robust that holding this antique instrument of stability called gold really didn’t make any sense.”

To suggest he was flat out wrong would be kind. While storage costs are a factor in holding gold, it should be noted that since 2000, gold has gone up six-fold and outperformed numerous assets, including the S&P 500. And worse still, the bond returns Dodge was referring to have hovered close to zero since Canada dumped its gold.”

Chuck again, Yeah, about that statement, I can hear Mr. Dodge saying right now, “Did I say that out loud?”

That was some news about FTX eh? It is being reported that between $1 and $2 Billion in client funds are missing… Uh-Oh… The firm filed for bankruptcy last week… What on earth will the baseball umpires wear on their shirts now?  See? That’s how strangely my mind goes from one thing to another!

The U.S. Data Cupboard will only have one day this week, where it yields real economic data, and that day is Wednesday, when Rocktober prints of Retail Sales, Industrial Production, and Capacity Utilization come to life… Well, with the news I reported above about credit card balances going through the roof, I could see Retail Sales seeing a nice gain in Rocktober… The BHI is indicating that too…

To recap… The dollar got whacked and whacked badly on Thursday after the softer, stupid CPI printed and showed inflation had dropped in Rocktober… And Friday the dollar got sold again, and each day saw Gold put in nice gains, along with the currencies like the euro, A$ and kiwi. Oil gained, bonds rallied, and stocks, well, they skyrocketed… FTX has a problem, Houston…  And consumers are piling up their credit card debts… Uh-Oh…

For What It’s Worth… Since I made Big Deal out of consumer debts this morning, this article from zerohedge.com plays well in the sand with it… This is about auto loans and it can be found here: https://www.zerohedge.com/personal-finance/auto-loan-delinquencies-hit-10-year-highs

Or, here’s your snippet: With prices rising and real wages falling, many Americans are struggling to make ends meet. They are increasingly turning to credit cards and other debt to fill the gap. But that creates other problems. Debt has to be repaid and a growing number of Americans are struggling to keep up with payments.

“TransUnion tracks more than 81 million auto loans in the United States. According to the consumer credit reporting agency, 1.65% of auto loans were at least 60 days delinquent in the third quarter. That is the highest rate for 60-day-plus delinquencies in more than a decade.

TransUnion senior vice-president Satyan Merchant told CNBC inflation was making it difficult for people to keep up with their car payments.

Consumers still want to stay current as best that they can. It’s just this inflationary environment is making it challenging. It leaves fewer dollars in their pocket to make the auto loan payment, because they’ve got to pay more for eggs and milk and other things.”

Unsurprisingly, subprime borrowers are having the most difficult time keeping up with their payments.

With loan-accommodation programs implemented during the pandemic, some borrowers managed to avoid delinquency. As those programs have ended, delinquencies have spiked. Merchant told CNBC that these programs pushed some delinquencies into the future.

According to TransUnion, 200,000 borrowers who took advantage of the pandemic-era auto loan accommodation programs are now listed as 60 days delinquent.

Like mortgage rates, auto loan rates have increased significantly since the Fed started pushing up rates to battle inflation. The average interest rate on new-vehicle loans rose to 5.2% in Q3. Interest rates on used vehicle loans average 9.7%. Combined with the rising cost of both new and used vehicles, along with rising fuel prices, the cost of owning a car continues to rise dramatically.”

Chuck again… I’ll say this one more… Debt is slavery… I’ll say nothing more…

Market Prices 11/14/2022: American Style: A$.6685, kiwi .6082, C$ .7525, euro 1.0317, sterling 1.1800, Swiss $1.0580, European Style: rand 17.2817, krone 9.9962, SEK 10.4328, forint 394.60, zloty 4.5454, koruna 23.5384, RUB 60.46, yen 140.33, sing 1.3739, HKD 7.8352, INR 81.26, China 7.0650, peso 19.47, BRL 5.2905, BBDXY 1,280.45, Dollar Index 106.78, Oil $87.78, 10-year 3.88%, Silver $21.52, Platinum $1,009.00, Palladium $2,008.00, Copper $3.75, and Gold… $1,760.24

That’s it for today…  Well, I’ve come down with something… it feels like a head cold, but I don’t feel sick, real strange, although I am sleeping longer each day now… That’s my body telling me I need the rest… 10-days to 2 weeks, and it’ll be gone… Just in time for Thanksgiving! I’m all alone by myself here again, that means I can turn up the volume on the music that I play in the morning! HA!  All by myself, don’t wanna be all by myself, any more… (Eric Carmen) And I didn’t call Pizza Man Pizza once this past weekend!  I see where we might get some snow on Tuesday this week… that would top of my dislike of November even more! Oh, well, I’ll be in S. Florida by year end, so I’ll just have to be patient!  Beegie Adair takes us to the finish line today with her version of the song: Home For the Holidays…  I hope you have a Marvelous Monday today… And Please Be Good To Yourself!

Chuck Butler

November 10, 2022

*currencies & metals drift ahead of the CPI print

* Don’t Forget to say, “Thank You” to a veteran… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Well, no baseball, no hockey, and some MAC college football game on, led me to my writing desk to read emails that I hadn’t gotten to yesterday, during the day, because it was so darn beautiful outside. The weather people tell me that we’ll have one more day of unseasonably warm weather, and then the bottom drops out and we return to normal, gray skies, cold raw, dreary, November days… In my reading last night, I came away convinced that I’m on the right track here with my thoughts that I’ve shared with you all…  The Eddie Higgins group greet me this morning with their version of one of my fave Christmas songs: The Christmas Waltz

The dollar stopped getting sold yesterday, and maybe just for a day, it would appear to me to be a brief correction of sorts. During the last weak dollar trend, not every day saw the dollar getting sold, and I would always remind people that “A Trend Is Not A One Way Street”…  So, unless we see consecutive days of dollar buying, then I would not be afraid to say that that a prolonged dollar selling period is upon us… The BBDXY gained 6 index points yesterday, but as soon as the U.S. trading session ended, the BBDXY was already giving back a couple of index points. The euro remained above parity with the dollar, and that was a good sign toward the thought I had above…

Gold is up one day, down the next, and the up days are monster days of gains, while the down days are meh… So, that leads me to believe that Gold has turned the corner… Gold lost $5.90 yesterday to close at $1,707.70, and Silver lost 29-cents to close at $21.13…  The price of Oil lost $2 in trading yesterday and ended the day with an $85 handle… Proving once again that Chuck gave it the kiss of death, when he talked about how he saw Oil returning to the $100 level… Not so fast Tim!   With China still on Covid lockdown, the demand is watered down, and so I get why the price of Oil has slid this week…

The 10-year Treasury rallied yesterday, with the yield dropping to 4.09% from 4.13%, to start the day. Remember, when bond yields go down, the price of the bond goes up, and vice versa…  So, someone was buying the 10-year yesterday… Why? Oh, well, it is, what it is…

In the overnight markets last night…  There was little to no movement in the currencies or the metals, with the BBDXY only off pennies, and Gold up just pennies… I think the traders were of the mind to just sit back and wait for the stupid CPI print that will come to us this morning. As I told you yesterday, traders are of the mind that has consumer inflation falling below 8% for Rocktober, and if that’s what happens, then they believe the Fed Heads rate hikes won’t continue to be so aggressive, and that thought brings us to a weaker dollar… The thigh bone is connected to the knee bone, that’s connected to the shin bone, etc. Sometimes you have to follow the string of events to get to what’s really eating at Traders…

The price of Oil is weaker by pennies this morning and trades with an $85 handle, and Bonds didn’t move one iota overnight… So, everyone is on board with the wait-n-see what CPI brings us thought of mind this morning… To me, I don’t think today’s stupid CPI will actually tell us anything important… Inflation is not getting beaten back, and any slippage of consumer inflation is a matter of how much the data was massaged, marinated and cooked, in my opinion…

I’ve been quite wordy this week in each Pfennig…I hope to put an end to that trend, today…  Well, I was surprised to see that my fellow Missouri voters, voted to legalize pot… The image of folks in Missouri by those on the East Coast, is well deserved…We are steady in our ways, we don’t jump off cliffs for the latest fads, we don’t go hog wild with false idols, etc. and therefore, I was sure that the legalize pot vote would e no…  Hmmm… 

OK… onto the ways of the world, and other things…  I read last night that consumer confidence in housing hit the skids in Rocktober, and Just 16% of consumers said they felt it was a good time to buy a house in Rocktober, according to Fannie Mae’s monthly survey. That figure marked a record low since the survey was first conducted in 2011. It was only a matter of time before the housing sector succumbed to the aggressive rate hikes by the Fed Heads.. .But the housing bubble was in need of finding a pin to pop it, and I do believe that the rate hikes have become that pin…

So, we have that going for us, coming up soon… Bill Bonner refers to the markets before this all began, as the Bubble Epoch…or the everything bubble…   That included stocks, bonds, housing, and then the list becomes crazy, with the likes of Bitcoin, and the other things that have been brought to the market, that have been outrageously priced..

So, the next bubble to pop after housing, will be stocks… I don’t know when or how deep it will be, but the bubble will be popped…  Once again last week, James Rickards, said that the stock market would collapse at 2:00 pm EST last Wednesday, after the Fed announced their rate hike… This was the 4^th time he had noted a time and date for the stock market collapse… Yes, the stock market is off 20-something percent, but collapsed? Well, I’ll let you make that call… I just don’t think putting dates an times on things that might happen, even if you’re absolutely certain that they will happen is just nuts…   I’m just saying..

I carried on yesterday with regard to what if we, as a country, had remained on the Gold Standard… That got me thinking about when I told you that Rep. Alex Mooney (R-WV) introduced bill HR9157 to congress to put the US back on a gold standard…  Now you and I know that the bill has a snowball’s chance in hell to get passed, but when asked about it, Rep. Mooney had this to say: “”The gold standard would protect against Washington’s irresponsible spending habits and the creation of money out of thin air,” Rep. Mooney said in a statement. “Prices would be shaped by economics rather than the instincts of bureaucrats. No longer would our economy be at the mercy of the Federal Reserve and reckless Washington spenders.”

Now, doesn’t that sound like a monetary policy we all would want to see in place?  So, why does the decision to go or not go to a Gold Standard, rest with Congress, and not with the American People? We The People… Everyone should send a note to their elected officials and tell them you want the U.S. dollar to be backed by Gold… 

Just think… I wouldn’t have anything to write about, and I would be put out to pasture, yet again… Let’s see, I was first put out to pasture by Mercantile Bank, then it was TIAA Bank, then the Gold Standard…Pretty good as far as I’m concerned, then I could write a blog about music… I’ve been asked to do that by a few readers through the years…

The U.S. Data Cupboard finally gets back on board today with some data prints that mean something… First up will be the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, then that will be followed by the Rocktober print of the stupid CPI, and finally the Real Hourly Earnings report…  Last month the Real Hourly Earnings Report showed that in Sept wages actually saw a drop…  So, wages certainly are not keeping up with inflation, and that can only go on for so long, before Moms and Pops all over the country throw their hands up in the air, and say “no mas!” Honey? Where’s that pitchfork? I need to call on someone….

To recap… The dollar’s consecutive days of getting sold came to an end yesterday… The BBDXY gained 6 index points yesterday, but the euro remained above parity with the dollar.  Gold & Silver also got sold yesterday, so it’s been up one day, down the next, with these two this week… That would mean that today is an up day… I guess we’ll see, eh?   Consumer Confidence with housing is at an all-time low, since records were being kept… Chuck called this the inevitable… The rate hikes by the Fed Heads were bound to become the pin the room to pop housing’s bubble…

For What It’s Worth… It’s been some time since I highlighted a report by Pam & Russ Martens, but that ends today, as they recently did a bang up job writing about the Fed’s Stability Report, and their report can be found here: Quietly, the Fed Releases Its Financial Stability Report and Lines Up a Scapegoat (wallstreetonparade.com)

Or, here’s your snippet: “One minute after the stock market closed on Friday, the Federal Reserve mailed out a link to its newly-released Financial Stability Report to folks who have signed up to get press releases from the Fed.

For those of you who have been reading our reports on the Fed for years – its unaccountable money printing and bailouts of Wall Street, the opaque activities of the trading floors owned by the New York Fed, its unchecked conflicts of interest, and its brazen, and as yet unprosecuted, trading scandal – you might suspect that the Fed would have pulled a lot of punches in its “Financial Stability Report.” You would be correct.

On the topic of derivatives, which remain the greatest risk at the mega banks on Wall Street, the word “derivatives” is mentioned just eight times in the report – with little clarity. For Wall Street On Parade’s multitude of warnings on the actual risks posed by derivatives, see our “Related Articles” below.

Another key risk to financial stability in the U.S. is the “interconnectedness” of the mega banks on Wall Street. This means that if one mega bank becomes insolvent or starts to teeter – as Citigroup did in 2008 – the systemic contagion spreads to the other mega banks that are counterparties to its derivatives, which in turn infects the entire financial system.

The word “interconnected” appears just four times in the Fed’s Financial Stability Report. The following text provides a picture of what the Fed would rather not talk about in any depth.

“Disruptions to economic activity or financial markets abroad can affect the United States through several channels. A pullback in risk-taking worldwide may cause further declines in asset prices and tighter credit conditions abroad and in the United States. Some U.S. investors would incur losses on foreign exposures, and foreign financial institutions would likely reduce lending to U.S. businesses. Foreign investors could sell Treasury securities and other safe U.S. assets, potentially adversely affecting financial-market functioning and the transmission of monetary policy. Foreign official holders might sell reserves to defend home currencies, and private holders might sell Treasury securities in the context of a widespread surge in demand for dollar cash buffers. Broader pressure on large internationally active foreign banks could — if sufficiently severe — result in material spillover to U.S. financial stability through strains on dollar funding markets (in which foreign banks are large participants) and interconnectedness with U.S. banks, although the effects would be mitigated by the resilience and sound capitalization of the U.S. banking system. More generally, modern financial markets are interconnected, so stresses abroad could lead to strains in U.S. markets and challenges for U.S. financial institutions.”

Chuck again… The Fed needs a scapegoat for when this all blows up in our faces… And Pam and Russ point out that “the Fed also wants to have a scapegoat lined up to point the finger at when things blow up, so it adds: “More generally, modern financial markets are interconnected, so stresses abroad could lead to strains in U.S. markets and challenges for U.S. financial institutions.”

Market Prices 11/10/2022: American Style: A$.6393, kiwi .5843, C$ .7370, euro .9995, sterling 1.1375, Swiss 1.0105, European Style: rand 17.8020, krone 10.4358, SEK 10.9375, forint 402.88, zloty 4.7356, koruna 24.5002, RUB 61.29, yen 146.49, sing 1.4038, HKD 7.8485, INR 81.81, China 7.2533, peso 19.57, BRL 5.1967, BBDXY 1,319.22, Dollar Index 110.89, Oil $85.27, 10-year 4.09%, Platinum $993.00, Palladium $1,849.00, Copper $3.62, and Gold… $1,707.96

That’s it for today… I hope all my neighbors in S. Florida have taken precautions with the strong Tropical Storm that will turn into a hurricane bearing down on our region… Hurricane Nicole, is going to give the Florida Treasure Coast a major headache… It had been a relatively quiet hurricane season in Florida, with only the devasting Ian that hit Florida last month on the Gulf side.. Well, we’re on our way to Thanksgiving, that will come in 2 more weeks… I know, how’d that happen, right? But first, we have Veteran’s Day tomorrow…This is a BIG DAY as far as I’m concerned, as I used to always take the day off of work,  to drive to Gerald Missouri, and visit my Dad’s, a WWII Veteran, grave site…  I’m thankful for all the veterans who fought wars to keep us safe and free… At Roger Dean Stadium, before each spring training game, they ask all veterans to stand so they can be recognized… I think all stadiums should do that!  Ok… Former colleague, Antione, sent me a note yesterday telling me his has Pandora’s Smooth Jazz Station on too! So, Jack Jezzro takes us to the finish line today with his version of the song: Here Comes Santa Claus… I hope you have a Tub Thumpin’ Thursday today, and don’t forget Veteran’s Day tomorrow… Please remember to Be Good To Yourself!   

Chuck Butler

November 9, 2022

* currencies & metals rally on Tuesday

* Gold turns the corner? 

Good Day… And a Wonderful Wednesday to you! Well, I decided that I needed to do something to bring the Blues losing streak to an end yesterday, so I donned by Blues hoodie, and Blues ball cap, over a blue and white shirt, and went to lunch! I received a couple of comments on it, and about the Blues losing streak, and all I could say was, “It’s my team, win, lose or draw”… It’s not like I haven’t gotten used to watching a team I adore lose… My beloved Mizzou Tigers can’t help but shoot themselves in the foot each and every game… It’s not always the Tigers’ fault, sometimes it really bad referee calls, like the one on last Saturday, and who can ever forget the 5 downs they refs gave to Colorado?  Our Blues lost  the game in Philly last night, so I guess it didn’t work, as The Philharmonic Symphony Orchestra greets me today with their version of the song: Sleigh Ride

The dollar got sold again yesterday… The markets, I read, were fearful of a red wave taking over the reins from the Blue crew. Why? Won’t it be the same-o, same-o, only with different guys and gals?  When push comes to shove in the economy, and corporations need bailouts, there won’t be one of the new crew to put their foot down, and say, “no!”, “you made your bed, now lay in it!”   Ok, I digress, but I just didn’t get the part about being fearful of new deficit spenders…

You see how jaded I’ve become about the whole election process? I don’t want to be this way, but it just creeps up on me, and the next thing I know… I’m saying things like I said above…   So, no matter what they said yesterday, the dollar lost ground, yet again, marking 3 consecutive trading days of losses… This time the BBDXY lost 9 index points to end the day at 1,312,  The euro climbed back above parity with the dollar, and the other currencies followed the Big Dog euro, as it left the porch to chase the dollar down the street…  It’s been some time since I’ve used that phrase… I’ve missed saying it!

And yesterday, I told you that the $4 loss that Gold was seeing in the early trading wouldn’t be that difficult to turn around… And turn it around Gold did just that, rallying all day, and ending up closing with a $37.10 gain, to close at $1,713.50… And Silver gained 53-cents to move over $21, AT $21.43…  Now let’s see if Gold & Silver can follow through on those nice gains yesterday… We ended Rocktober with Gold at $1,638…  That’s $75 in gains in 7 days… with most of the gain coming the last 3 trading days.

Has Gold turned the corner? The technical people would say that Gold passed the $1,680 and $1,700 levels that should bode well for it to continue to rise… Well, then who am I to argue with the chartists?

The price of Oil slid by $3 yesterday, and ended the day trading with an $88 handle… And Bonds hardly moved on the day…

So, with the dollar apparently in a free fall, I have to ask the question… “When does the PPT, come in with their treasure chest of funds in the Exchange Stabilization Fund to prop up the dollar once again?”  Just like the cancer wolf… I know he’s always at the door… And as Frank Sinatra sang, You can be riding high in April, and shot down in May… or something like that. (Hey, I can’t remember every lyric of every song I’ve ever heard, although I do try to!)

Or, maybe, just maybe, cause you never know, the PPT will sit on the sidelines this time? OK, I know that’s wishful thinking, but one has to wonder about their mental capacity if they buy dollars to prop it up and then the markets still take it down, ala the yen and the Bank of Japan?

In The overnight markets last night… Well, the currencies are trading in the same clothes as yesterday, as there was little to no movement in the dollar overnight. The BBDXY is up less than 1 index point this morning, and the euro remained above parity to the dollar. Gold is seeing some selling in the early trading today, and starts the day down $7, and Silver joins Gold trading in the red, and is down 19-cents this morning. Again, nothing out there that prevents these two from turning around on the day. 

The price of Oil has dropped another buck, and trades this morning with an $87 handle… The reports/ rumors earlier in the week that China was going to open their economy up, proved to be false, and now the fear that the Zero Covid program will continue longer, has traders questioning the demand for Oil, and so it sees some weakness…  Bonds remained unchanged during the night, so we start today with the 10-year Treasury’s yield at 4.13%… Certainly not as high as I would think it should be, but then when does logically thinking come into play in these manipulated markets?

Well… I had a very important lunch yesterday, with my former Boss, Frank Trotter, who brought me up to date with everything that’s going on in Kansas City, no wait, everything that’s going on with his new venture, Battle Bank…  They’re not ready for prime time yet, still getting their ducks in a row, and waiting on regulators… I think he mentioned next March for the virtual opening of www.Battlebank.com  if you go there, you can put your name and email info on a Waiting list, and when they are ready to launch, you’ll be notified… How’s that for service?  I personally, can’t wait for the opening, so I can move my banking balance from TIAA to BattleBank!   

Frank is gathering some very good people to join him in his new bank, and they will be service oriented, so look for that good personal service that EverBank used to give you!

Ok, now back to our regular programming…  A lot of news headlines last night, talked about how the dollar is getting sold ahead of the inflation data that will print on Thursday, and they all talked about how traders are looking to “risk on trades”, which means Gold…   Remember when every day I report whether it was a “risk-on day” or a “risk-off day”?  Those were the days my friend, I’m so glad that the ended!  But every now and then some writer pulls the phrase out of the closet, and brings it to show how smart he sounds… 

The thought for the stupid CPI is that it will show a weakening below 8% in Rocktober, and if that’s the case, then the markets feel that the Fed Heads have no choice but to pull back the size of their rate hikes…. Remember, these are the Wall Street guys that only care about stocks, and don’t care about inflation… To me they are just crybabies…   But what happens if the stupid CPI doesn’t show that much of a weakening in inflation?  Ahhh,  grasshopper, good question… I guess we’ll have to wait-n-see the color of the stupid CPI tomorrow…

Good friend, Dennis Miller of www.milleronthemoney.com sent me a link to the U.S. Treasury’s final balance sheet for fiscal year 2022, which ended Sept 30^th…  Total tax receipts and other income totaled $4,896 Billion, and total outlays were $6,272 Billion, for a total deficit for 2022 of $1,375 Trillion… The thing about the chart that stuck me as weird…The largest outlay for the U.S. is Social Security… But wait, didn’t we all pay into that fund? Yes, we did, and the Gov’t spent it… So, now when all the baby boomers, like me, retire and take their social security payments, it becomes a deficit for the Gov’t to pay out…   If they had only kept their dirty mitts out of the cookie jar, back in the day…

I have to say this now… I’ve been lucky, and so have just about everyone else that reaches retirement age, in that we lived during the greatest growth of wealth every recorded here in the U.S.  The Fed St. Louis, through their FRED division issued this statement: “U.S. national wealth has surged in the past decade, dwarfing the peaks seen in the past: specifically, from $69 trillion to $153 trillion between 2012 and 2021, a 220% rate of increase. National wealth has continued to rapidly increase even after controlling for inflation and economic growth.”

I would have to say that most of that growth in wealth has come from the decade long stock market bubble.. I wonder how that’s going to look in a couple of months from now?  And that brings me to say something that I told a group of bankers and lenders in Atlanta years ago… I said, “if the U.S. had remained on the Gold Standard, our quality of life would not see the excesses that we see today, because there wouldn’t be easy credit, or currency printing, instead there would be deficit adherence… So, we could do without some gee gaws, or tchotchkes,  100 inch tv screens, and what have you, but we wouldn’t have $31 Trillion in current Debt and $172 Trillion in Unfunded Liabilities hanging over our heads like the Sword of Damocles”…  We should have known better, that given free rein to print currency, that it would lead to what it has… But our leaders didn’t know better, or they thought that it was OK… as long as inflation didn’t rise up…Uh-Oh…

Last week, the Eurozone printed consumer inflation at 10.7% for the previous month… As far as I can tell, there are no substitution games, and weighting games played with their consumer inflation calculations… So, the ECB is so far behind the inflation 8 ball right now that it can hardly see the rest of the table… So, expect more 75 Basis Points rate hikes from the ECB, as they attempt to play catch-up… And this thought that more rate hikes are to come, even though the Eurozone is in negative real interest rates territory, is helping the euro climb out of its below parity hole…  These are the same thought regarding rate hikes coming that helped fuel the dollar’s surge this summer and fall, until now that is…

The U.S. Data Cupboard is still lacking today, so let’s move along, for these are not the droids we’re looking for…

To recap… The dollar got sold big time yesterday in the U.S. session, as the BBDXY lost 9 Index Points on the day, and the euro climbed over parity with the dollar. Gold has seen new life recently with a move being made because of inflation fears… Gold gained $37 yesterday, and Silver gained $53-cents, both moved beyond what was considered major levels or resistance… Chuck gives an update on the new BattleBank.com and says he can’t wait for it to open its virtual doors…

For What It’s Worth…  I found this on Ed Steer’s letter this morning, and you know that I’ve told you several times that if Ed thinks the article is worthy, then it’s a no-brainer for me!  This is an article about a Big Hedge Fund calling for armegeddon and it can be found here: Hedge-fund giant Elliott warns looming hyperinflation could lead to ‘global societal collapse’ (msn.com)

Or, here’s your snippet: “That’s executives at leading hedge-fund firm Elliott Management Corp. warning that the world is heading toward the worst financial crisis since World War II.

In a letter sent to investors, and reportedly seen by the Financial Times, the Florida-headquartered firm told clients that it believes the global economy is in an “extremely challenging” situation that could lead to hyperinflation.

Elliott did not respond to MarketWatch’s request for comment.

The firm, led by billionaire Paul Singer and Jonathan Pollock, told its clients that “investors should not assume they have ‘seen everything’ ” because they have been through the peaks and troughs of the 1987 crash, the dot-com boom and bust, the 2008 global financial crisis, and previous bear and bull markets.

It added that the “extraordinary” period of cheap money is coming to an end and has “made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period.”

The letter reportedly said the world is “on the path to hyperinflation,” which could lead to “global societal collapse and civil or international strife.”

Elliott reportedly argued that markets have not fallen enough yet and that an equity-markets decline of more than 50% would be “normal,” adding that it couldn’t predict when that would happen. The S&P 500 has dropped 19% from its peak at the beginning of the year.

Elliott executives warned clients that the idea that “ ‘we will not panic because we have seen this before’ does not comport with the current facts.”

They blamed central-bank policy makers for the current global economic situation, saying they had been “dishonest” about the reasons for high inflation. They said lawmakers had shirked responsibility by blaming it on supply-chain disruption caused by the pandemic instead of citing the loose monetary policy imposed two years ago during the COVID-19 peak.”

Chuck again…  WOW, a stock jockey that called out the Fed’s loose money printing… Now that’s something to write home about, eh?  The “investors should not assume they have seen everything” statement is quite true in my opinion… for whatever that’s worth.Market Prices 11/8/2022: American Style: A$ .6468, kiwi .5904, C$ .7440, euro 1.0046, sterling 1.1483, Swiss $1.0176, European Style: rand 17.7940, krone 10.2776, SEK 10.7963, forint 401.56, zloty 4.6807, koruna 24.2285, RUB 61.20, yen 145.79, sing 1.39997, HKD 7.8595, INR 81.43, China 7.2537, peso 19.55, BRL 5.1701, BBDXY 1,312.49, Dollar Index 109.70, Oil $87.46, 10-year 4.13%, Silver $21.24, Platinum $995.00, Palladium $1,732.00, Copper $3.64, and Gold… $1,706.25

That’s it for today… Now that the voting has taken place, now all the playing of musical chairs begins, with claims of wrong doing, etc. Same stuff we went through in 2004, remember hanging chads?  UGH!  I received my new Harry Bosch, Renee Ballard Book yesterday, and will begin reading it today… I thoroughly enjoyed my time with good friend, Frank Trotter yesterday… He showed me a video of the “mule path” hike he went on last week, simply beautiful around Sedona, Ariz… We talked and talked, until everyone in the restaurant had left to go back to work, or whatever… A dear reader sent me a note and asked me if I was rushing Christmas with me listening to Pandora’s Smooth Jazz Christmas… I responded, maybe I am, but I love this music style so much, and I only listen to it at this time of year…   Sam Whitmire plays his piano on his version of the song: Silver Bells, to take us to the finish line today… I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself!

Chuck Butler

November 8, 2022

* Currencies & metals rally on Monday

* Chuck’s history lesson… 

Good Day… And a Tom Terrific Tuesday to you… Well the wheels have fallen completely off our Blues wagon, as they lost their 7^th game in a row last night, in Boston. They played, and skated better in this game than the previous 6 losses, but… There are no participation trophies in professional sports… And if you ask me, the making sissies out of everyone started with participation trophies… But that’s a discussion better had on the Butler Patio…  I had to get outside yesterday to take advantage of the nice weather, because later on this week, it’s going to turn to more November weather… UGH! I’ve got Pandora’s Smooth Jazz station up and going again this morning, and today I’m greeted with The Vince Giaraldi Trio playing: The Christmas Song…

Well, the massive dollar selling that took place on Friday last week, was taken down a notch or five yesterday, as the BBDXY lost 4 index points on the day, and saw the euro climb back to parity with the dollar… You know, I can’t help but think that the news last week that Saudi Arabia has asked the BRIC’s nations to join their cabal, has had an effect on the dollar selling… You see, seeing the Saudis pin their colors to the Brics mast, is very concerning, and at first I thought the markets were shrugging it off, but not now… You see, here’s the problem for the dollar… The dollar is used in most oil terms of trade, but if the Saudis don’t feel as though they need the U.S. protection any longer, they could very well begin to trade their oil in rubles, euros, renminbi whatever floats their boat…  Think about that for a minute and see if you see this news as a positive for the U.S. dollar…

I found this quote on Bloomber.com regarding the recent change in the dollar’s forturnes… “News that would have been very dollar positive a few months ago now seems to have marginal impact,” Steve Englander, Standard Chartered Plc’s global head of G-10 foreign-exchange research, wrote in a Monday note. This suggests “further dollar strength needs a wallop rather than a dollop of dollar-supportive news.”

Chuck again… It seems to me that in recent trading days the appetite for risk assets remained strong ahead of the stupid CPI/ US inflation data and the results of midterm elections. We’ll have to see hos this all shakes out, but it could be something big for nondollar investments…

Gold didn’t get to participate in the dollar selling yesterday, and closed down $7.20 , to end the day at $1,676.50. Silver lost a plug nickel… to close at $20.90…  I also think that the news that Central Banks went hog wild buying physical Gold in the 3^rd QTR hasn’t really gotten to the Gold investors yet… And by Gold investors I mean the Bid Money guys, and the Fund Managers, etc. My day always told me to “follow the money”, and in the 3^rd QTR that was to Gold… But like I pointed out last week, Gold didn’t gain, instead it lost ground in the 3^rd QTR, even in the face of all that physical buying… That has to be a full illustration of price manipulation in paper contracts if you ask me…

The price of Oil slipped by a buck yesterday and ended the day trading with a $91 handle… And Bonds… Well the 10-year’s yield rose again and ended the day trading with a 4.22% yield… The 2-year Treasury’s yield is 4.74%, so our yield curve is still inverted… I read an article the other day where the writer tried desperately to convince his readers that an inverted yield curve doesn’t mean we’re going to have a recession…  I wasn’t buying it one iota, but it’s always good to hear the other side’s version, right?

In The overnight markets last night… The dollar ended the selling… The dollar got bought, and the BBDXY gained 2 index points overnight. The buying wasn’t swift, it wasn’t strong, it was just meh… But the euro fell back below parity to the dollar, and the rest of the currencies drifted asea… The price of Oil dropped 75-cents to trade exactly at $91.00 this morning, and Bonds stayed weak overnight.

Gold just can’t seem to follow through, on its $52 gain last Friday, and is down again in the early trading today $4.. Not that that can’t be turned around quickly, it’s just the inability for Gold to follow through, is an indication to me that it’s still not ready to move forward, like I suspect it to do, at some point. Gold is not ready for prime time… But it will be ready, soon…  this is not important, but the song by Yes, Soon, just popped into my head… here are some lyrics to the song:” Soon oh soon the light, Ours to shape for all time, ours the right, The sun will lead us, Our reason to be here”… Yes, was one of those bands that you really needed headphones on to listen to… I’m just saying

Well, things sure have changed in the last 3 trading days for the dollar, eh? Recall I told you that there wouldn’t be any warning that the strong dollar trend was ending, we would just end up at the end of a month, and look back and say, “it looks like the strong dollar trend is over”…  And we’ve had so many false dawns with the thought that the strong dollar trend was over in the last 5 years, that I’ve given up trying to find something that will indicate that we’re about to turn… The one caveat that we have these days in the dollar trading that we didn’t have the last time the dollar went into a weak trend, and that caveat is… The Exchange Stabilization Fund (ESF), or the price manipulators…

Back in 2008, during the last weak dollar trend, Bear Stearns closed up shot… And no one thought at the time about JPMorgan buying their foreign exchange business… You see Bear, at the time, had the largest short position in Silver… And JPMorgan bought that business, and the rest is history…For, you see, Bear’s short position in Silver was nothing like exists today, it has been grown expotentially…  ( I think that’s a word, and spell check isn’t coughing or wheezing at the word, so it’s a go with me!) 

Did you ever wonder why the U.S. Gov’t allowed Lehman Brothers to collapse, but found a buyer for Bear Stearns? Well, there are books written about this piece of our history, and from what I read it had to do with personality conflicts, between the head of Lehman and the Gov’t…   Hmmm…

Ok, back to today… Well not so much… yesterday, having read every book that I have here, and waiting for the delivery of a new Harry Bosch book, I picked up Addison’s Wiggins “Little Book of Shrinking Dollar” that was written in 2012, and featured some input from me!  In it I said the following: “I tell people at every stop I make that I believe the dollar will lose its reserve currency status in the next 10 years and maybe even sooner. I can’ point tone country that has its eyes focused on removing the dollar from its lofty position, and that’s China. China’s President Hu, has said that, “The dollar currency system is a product of the past”…

To my defense, here, I would point out the Covid plandemic really threw a spanner in the works of the Chinese, and has pushed back their timeline for removing the dollar from its lofty status… It will take at least one year if not two, to get China’s economy back and running on all 8 again… And only then will the Gov’t turn its attention to the dollar once again…

The book was issued in 2012, the year the dollar finally began to come out of its decade long weak trend…. But how were we to know that then? Everything that was discussed in the book as being bad for the U.S. still exists, but only worse…  So, here’s a memo to Addison, who I know reads the Pfennig, it’s time to do an update on this book… don’t you think?

The need for a Gold Standard was a prominent discussion in the book… Addison highlighted, Ron Paul’s book: A Case For Gold…   James Rickards did an update on that book, but it came after 2012… 

Well, this morning I read a report that says that inflation is really hurting small businesses… Here’s the skinny: “Small businesses are struggling to pay rent due to higher rent inflation and fewer customers. The struggles vary by type of business…

Due to ongoing economic challenges, small business owners’ ability to pay their full rent on time in October took a major hit based on a new Alignable poll. In fact, the U.S. rent delinquency rate among small businesses jumped 7% in just one month, marking the largest, most rapid increase in 2022.

37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.”

Chuck again… Awww, don’t worry about these guys, there’ll be a bail out just for them! 

Speaking of bailouts… Ok, the airlines here in the U.S. received tons of currency from the Fed / Gov’t during the plandemic. Now they are back to normal capacity in planes, but… Instead of shoring up their businesses with the bail out money, they used it instead to buy back contracts, and retire people early, and now, guess what the Airlines need more than anything? Pilots… The bought them out, and now they need them! Talk about a bad business plan!  But not to worry, there’ll be a bailout for them too… Bailouts for everyone! The bartender down the street, the kid that mows lawns, the little kids at the illegal lemonade stand, they’ll all get bailouts!

Ok, stop me… I’m getting out of control this morning… It’s election day here in the U.S. and since most everyone voted early, the lines should be shorter, eh? Yeah, and I have a bridge for sale… But bigger than the election day outcome, is the drawing of the $1.9 Billion Power Ball!   Can you imagine, what you could do with $1.9 Billion?  I heard a TV reporter yesterday, say, “if you win it, maybe you could share it”… Wait, What? That’s a real socialist statement there, but I let it go, not wanting to get my blood pressure rising!

The U.S. Data Cupboard still is lacking today, and will remain that way until Thursday this week… No data today because of election day…  So, we more on…

To recap… The dollar continued to get sold yesterday, but recovered in the overnight markets by a small amount. It’s election day, but more important is the drawing of the $1.9 Billion Power Ball! I kid of course, what else can one do with set ups like that? Chuck goes all ape on the airlines… and small businesses are having problems, once again, but Chuck figures that there will be a bailout for them, and everyone else that has not made it in business!  Chuck goes through some recent history, that right now seems like eons ago, but it isn’t, it’s just 15 years ago… Go Vote!

For What It’s Worth… Well, remember my rant a few weeks ago about how the Gov’t is going to spend billions on green energy and forget about the energy that made the country what it is?  Well, I also talked about how it will be a very cold winter in Europe, right? Well, Germany is doing something about that, and that’s what this article is about, and it can be found here: Germany Dismantles Wind Farm to Expand Coal Mine (needtoknow.news)

Or, here’s your snippet: “I should probably give our readers a moment to double-check and ensure that you didn’t inadvertently wander into an article from the Babylon Bee or The Onion. But the title of the article stands as is and it’s legitimate. German energy company RWE operates several different types of power generation operations in the state of North-Rhine Westphalia. At one location, they have a large lignite coal mine and a wind turbine farm located side by side. (A rather startling juxtaposition given the divisive nature of the ongoing green energy debate.) But some changes are coming, and not the sort that green energy enthusiasts are cheering about. RWE has begun taking down some of its wind turbines to make room to further expand the coal mine. A spokesperson for the company said that they realize that this development may be seen as “paradoxical.” (Townhall)

In the throes of an energy crisis, a German energy company is moving forward with plans to dismantle a wind farm adjacent to its coal mine in order to expand operations.

The removal of one of the wind farm’s eight wind turbines occurred last week, with two more coming down next year and the rest getting removed by the end of 2023.

Recognizing the “paradoxical” nature of the situation, Germany energy company RWE, which operates the Garzweiler coal mine, said it’s necessary.

“We realize this comes across as paradoxical,” RWE spokesperson Guido Steffen told the Guardian. “But that is as matters stand.”

Chuck Again… I applaud the Germans for realizing that wind farms and solar panels aren’t going to replace the energy that we’re used to… As you can tell, I’m not a green person, in the manner that they speak of them… I truly believe in weather trends, and that is proven by Time Magazine, that has had 4 different covers on its magazine through the years, with each one alternating the viewpoint that it has either gotten too hot or too cold… Check it out, I don’t make this stuff up folks… And I’ll stop there, because I don’t want 1,000 emails to have to contend with… Just stating my point of view, and in these days that can get you cancelled… Hopefully, that doesn’t happen… But then the DHS, is on the prowl, and looking for people that make statements that aren’t in line with the Gov’t’s viewpoint… What? Is that someone knocking on the door, Kathy? Oh, no! It’s the Gov’t and they want to talk to me about my letter…   Well, it’s been fun while it lasted folks…  

I’m just playing around there, I hope you see that…

Market Prices 11/8/2022: American Style: A$ .6468, kiwi .5933, C$ .7410, euro .9995, sterling 1.1454, Swiss $1.0091, European Style: rand 17.8512, krone 10.2856, SEK 10.8436, forint 400.77, zloty 4.6975, koruna 24.3652, RUB 60.99, yen 146.30, sing 1.4025, HKD 7.8500, INR 81.91, China 7.2543, peso 19.46, BRL 5.2253, BBDXY 1,319.12, Dollar Index 110.35, Oil $91.00, 10-year 4.21%, Silver $20.75, Platinum $980.00, Palladium $1,893.00, Copper $3.60, and Gold… $1,672.66

That’s it for today… I’ve got to get going, to get to the polls and vote…I’m beginning to become jaded about voting, and I don’t like that… I’ve got this nagging idea in my head that my vote doesn’t mean a hill of beans in regard to changing the country… I don’t like that at all, but it’s there, and there’s nothing I can do about it… Kathy was supposed to be on plane this morning to our winter home, with her mother, but a late hurricane is headed that way, so being the cautious one, she changed here trip to leave on Friday… Then I’ll be all alone by myself once again… Hello? Pizza Man, Pizza? I need a pie, large, extra cheese! Now do that Pizza man bit in an Elvis voice… That’s funny! The Stephan Kummer Trio takes us to the finish line today with their version of the song: White Christmas…  I love the album that this is on, by the Stephen Kummer Trio, called: Christmas in the City…  OK… I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler

November 7, 2022

* Currencies & metals have strong rallies on Friday

* The Bank of England tries to play catch up with Inflation… 

Good Day… And a Marvelous Monday to you! And Congratulations to the Houston Astros for winning baseball’s World Series, hopefully without cheating this time. I rooted for the National League team, the Phillies, because they were from the National League, but called the Astros as the winner before the Series started, based on what I had seen so far. My beloved Mizzou Tigers got “Mizzoued” again last Saturday… And lost to their kryptonite foe, Kentucky, yet again. It was a beautiful weekend here in the MidWest, and on Saturday, we sang Happy Birthday to my darling second daughter, Rachel… Then we brought Braden and Evie home with us, and I woke up yesterday to the sound of little feet running down the hallway… I love that sound! Well, I turned on my fave station for the rest of the year… Pandora’s Smooth Jazz Christmas on Saturday, and this morning I’m greeted by Beegie Adair, and her instrumental version of the song: Winter Romance…  Dean Martin sang that song the first time I heard it, and loved it!

Well, how about that day for Gold last Friday?  Gold hot higher and ended the day up $52.10 and closed the week at $1,683.70… Silver was not to be outdone, by Gold, and it outperformed Gold, on a percentage basis, as it is wont to do when the two rally like that. Silver ended the week up $1.39, at $20.95!  The dollar got sold, like I have rarely seen it get sold for one day, on Friday, with the BBDXY losing 23 index points from Thursday morning’s 1,344…   The Currencies were up VS the dollar, as the BBDXY indicated, but there were no major movers, all the currencies just rallied a bit, and combined to beat up on the dollar for once.  The price of Oil squirted higher by $4 to end the week with a $92 handle…Bonds saw a slight increase of the 10-year’s yield, to 4.15%, to end the week

So, to me, watching this dollar selloff had me thinking that it was a case of one major seller, begetting another major seller, and then before you knew it the dollar was in a free fall… So, I think that Gold benefitted from this dollar selling, but to me, it also appeared to be a lot of short covering…  But when Gold moves $52 in one day, there has to be a combination of things moving it…

So, do you think it took a couple of days for the Fed’s Jerome Powell’s message on “I don’t think this is any time to pause” message? That’s what it looked like to me, but there could also have been a major reaction to the Jobs jamboree number… If hiring is still strong, then that fuels the Fed Heads push to hike rates further, and that probably scared the bejeebers out of the naysayers… And since it is a “given” that the Fed Heads rate hikes are going to bring the economy to ground zero, that’s probably what got the dollar sold to begin with.

Speaking of the Jobs Jamboree, I found this to be quite amazing…The BLS said that there were 261,000 jobs created in Rocktober… A quick look at the Fed’s site to get their Birth/ Death additions, and I was flabbergasted to see that in Rocktober the BLS added 455,000 jobs to the surveys… Wait, What? Yes, that’s right 455,000 jobs were created out of thin air, so therefore the surveys showed a different result, and it would have been a negative – 194,000… So, for once, I was glad that the markets didn’t look under the Fed’s hood, and see that addition…

In The overnight markets last night… Well, at first, the rhetoric going around the markets was that Traders were taking back their bets of a huge China opening… but then things turned around and the dollar selling continued, with the BBDXY losing 2 more index points overnight, and the euro nearing parity with the dollar. Gold, however is not gaining in the early trading today, and is down $5 to start the day, while Silver is down 26-cents… Certainly not the kind of sell offs that can’t be turned around, so we can only hope that happens today. I really don’t believe that we’ll see much movement in the markets the next couple of days, as the mid term elections in the U.S. are tomorrow, and then it’ll take a day to sort out the madness, and chaos of elections outcomes. I don’t know what to expect in these elections, so I won’t offer a guess, but if I were voting for every American, I would be voting for change… Get the news buffoons in, and see if they can do any better than the previous buffoons…  That’s my take, and I’m sticking to it!

The Price of Oil slipped a bit, and then rebounded to remain trading with a $92 handle this morning. Our friends (NOT!) at OPEC, are happier, now that the price of Oil has reach the $90 handle, as that is what their goal was for Texas Tea, when they cut their production levels. I see Oil as something that is needed every day by everyone, and therefore, the demand is great, while the supplies are diminishing, with the OPEC production cuts, and the loss of Oil rigs here the U.S. producing Oil. So, where does that lead the price of Oil to? Well, without intervention, I would suspect it returns to plus $100…  But, that caveat that it trades without intervention is just wishin’, and hopin’ and prayin’ that it will happen… I’m just saying…

Under the heading of “you can’t make this stuff up”… I read yesterday that “Majority of Americans back new stimulus checks to combat inflation”… Really? Are you kidding me? I have a dear reader that always replies to the Pfennig, reminding me that “you can’t fix stupid”…   I agree 100%, and this is living proof! The Gov’t deficit spending is what got us in this inflation mess to begin with, and now you want them to create more inflation so you get a stimmy check?  OMG! I can’t believe this is happening…  If only these “majority of Americans” were required to read the Pfennig! They would know that money supply equals inflation, and to get a stimmy check you have to increase money supply… I say no more…

Well… in keeping you up to date with the call that I made two years ago, that the U.S. Gov’t will issue a digital currency, and your dollars will be replaced with digits… There was a report that I read, that can be found here: https://www.theblock.co/amp/post/183076/new-york-fed-completes-experiment-using-on-chain-digital-dollar  

And in this article it explains that “An office within the Federal Reserve Bank of New York has completed a test of a central bank digital currency for wholesale, cross-border transactions, exchanging a U.S. digital dollar with experimental foreign currencies on separate blockchains.

The experiment known as Project Cedar: Phase One focused on the potential for central bank digital currencies to become viable options for large foreign currency transactions, though Federal Reserve Chair Jerome Powell and other board members of the U.S. central bank have made clear that the creation of a digital dollar is not a foregone conclusion.”

Chuck again… She’ll be coming around the mountain when she comes… And she’ll be spending digits! The Gov’t will know everything that you spend digits for, and they will be able to automatically deduct digits from your account if you fails to spend enough of them.. .And Bank fees?  They’ll be coming through like a hot knife through butter… And you won’t be able to do a darn thing about it!   Got Gold?

Sure, they’ll tell us that this is just for Gov’t spending, and then cross their fingers behind their backs!  Baby steps… Let’s just say that there are 5 steps to the next floor, and right now the Gov’t has moved up to the second step.. I’m just saying.

Oh, I almost forgot this… I have no idea why I just remembered it but, I did, so here goes… Some of the dollar’s problems on Friday came from rumors that China is going to open back up… China’s economy has been shut down for some time now with their ‘zero Covid” policy, but when it does open back up, it will be going like gangbusters to play catch up, and that knocked some the stuffing out of the dollar on Friday.

OK, this is something I rarely do…. I’m going to relay to you a note I received in the Pfennig Replies box last Friday… I think this person makes some real good points here…. I sure hope it’s not as dire as it appears though, for all of our sakes!  Here goes…

“I cannot find any hope no matter where I look. Everything is fake, overmanipulated, or lied about. And no one really cares. Everyone is describing the water while we are about to drown. Pick a subject, inflation, wealth disparity, plain ass lying elected misfits, fake fed counterfeiting, possible fake fed crypto planning, gazillions of bad bet derivatives, fuel supplies gone, Russia talking nukes, North and South Korea daring each other with missiles, everything happening at the same time.

I got a real bad feeling this is about to hit the fan big time. The majority really do not give a shit. They are all atwitter about the bullshit on social media instead. No one is taking any steps to solve even one of the problems. Unfortunately, it has to collapse first, everyone saying it was a black swan that no one could see coming, and more extend and pretend occurs. Until.

And if you expect any candidate elected after the election is going to even address the real problems, there is a certain bridge for sale again.”

Chuck again, now… if only traders would take this point of view… We could get to busting bubbles all over the place, and it wouldn’t take long.

I came across a website this past weekend that was titled: Stop Spending Money On The 4 Stupid Things…  #3. Was stop paying your Credit Card debt in monthly increments… I call that stating the obvious!

The U.S. Data Cupboard last Friday, had the aforementioned Jobs Jamboree… So nothing else to talk about there…  And this week’s data agenda, doesn’t really have anything to write home about until Thursday, when the stupid CPI for Rocktober is printed, of course after it has been massaged, basted and cooked…

To recap… The dollar got sold for a number of reasons on Friday, but when it all added up, the dollar went into a free fall! The BBDXY lost 23 index points, and Gold gained $52! China is rumored to be ready to open their economy again, the Jobs report was strong, that is if you take it on face value and don’t look under the hood. And there was a ton of short sells being bought back/ covered in Gold & Silver… and Chuck wants to know what the “majority of Americans” were taught in school?  

For What It’s Worth… OK, longtime readers know that I have a good relationship with my friend, Dennis Miller… Well, Dennis included my thoughts on his latest letter that came out last week, and can be found here: My Dad Was Dumb Like a Fox! – Miller on the Money

Or, here’s your snippet: “DENNIS: We read about people getting clobbered in the bond market. I continually remind readers that we are NOT bond traders.

Any bond you buy should be held until maturity. While interest rates fluctuate, when they mature, you will get your money back. The real threat is inflation, you can lose a lot of buying power along the way.

What is happening to those who bought trillions in bonds yielding 1-2%? I know you’ve mentioned that certain pensions, etc., were required to hold a certain amount in bonds.

CHUCK: Well, this is a two-pronged answer. First, let me explain that there are institutions that must buy Treasuries, no matter what the current yield is.

Pensions, Insurance Companies, State and City Gov’ts. They have investment mandates that require them to own only Treasuries… So, these folks are now holding some underwater bonds, meaning they could not currently resell them without taking a big loss. They are the “Big Boys” and can deal with losses much better than you and I.

Speculators who thought the Fed was going to pivot and begin to cut rates are looking at red ink in their bond holdings right now. That red ink will continue as long as they hold the bond.

If they sell before maturity, they will take a loss. If they hold on to maturity they will get their principal back, but the interest they receive will be well below the current market rates. They hope the Fed will panic and cut rates radically so they can resell the bonds for a profit, but that is a real gamble. It’s not a situation that I would want to be in.”

Chuck Again… yes, we talk about bonds, and when they should be bought, etc. so take a look at this letter of Dennis’ and then subscribe if you don’t already, it’s free, and he writes once a week, so it won’t fill up your email box every day, like someone else I know… HA!

Market Prices 11/7/ 2022: American Style: A$ .6263, kiwi .5920, C$ .7418, euro .9978, sterling 1.1444, Swiss $1.0102, European Style: rand 17.8405, krone 10.2508, SEK 10.8458, forint 401.23, zloty 4.6966, koruna 24.3905, RUB 61.02, yen 146.67, sing 1.4035, INR 81.91, China 7.2284, peso 19.48, BRL 5.0815, BBDXY 1,319.59, Dollar Index 110.52, Oil $92.16, 10-year 4.13%, Silver $20.69, Platinum $965.00, Palladium $1,865, Copper $3.55, and Gold… $1,677.73

That’s it for today… Oh! I almost forgot to add this morning that the Bank of England (BOE) hiked rates 75 Basis Points last Thursday!  Playing catch up with inflation is hell, isn’t it BOE?  OK, now onto the finish… Little Evie was a treat yesterday, she came downstairs with me, and talked to me for 20 minutes straight, and I only understood about ½ of what she was talking about, but… she was so darn cute doing it! Braden had said on Sat. night that he wanted to go to Wally’s Sunday morning, so I got ready to go, and he was online playing a game with one of his friends, and I guess he forgot about going to Wally’s!  Oh well…  I just finished reading a book that was different than my usual reading material… It’s a book about Clint Hill, Special Services Agent that served under 5 presidents!  The chaos of the Nixon Administration, brought back so many memories of that time… Steve Oliver and his acoustic guitar is playing God Rest Ye Merry Gentlemen as we head to the finish line today…  I hope you have a Marvelous Monday today, and please…. Be Good To Yourself

Chuck Butler

 

 

 

November 3, 2022

* Currencies & Metals get sold yesterday and last night!

* India introduces its Central Bank digital Currency… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Ok, all you Phillies fans out there that are blaming me for jinxing their team, when I said yesterday that they were on a roll, and could end up winning the World Series at home… I had nothing to do with their loss last night! Another Beautiful day here in the MidWest yesterday, and I took full advantage of it! My good friend, Dennis Miller called me while I was outside reading, and I told him my thoughts on the Fed Heads’ rate hike… Well, no worries, I plan to do that here for you dear reader, today! Deep Purple greets me this morning with their song: Space Truckin’  It’s a real foot stomper that needs to be played LOUD… But I won’t this morning, because, 1. I don’t like loud noises in the morning, and 2. Kathy is still sleeping!  I would think #2 would be more important to my health… HA!

Well as AC/DC sang… Dirty Deeds, done Dirt Cheap…  The folks that are out there screaming about the Fed rate hike yesterday, are the folks in the stock market that are getting their rear ends handed to them. You see they have money, and inflation doesn’t bother them… But for me, and everyone else out there that isn’t swimming in cash, we need these rate hikes to combat inflation before it runs away from us.  So, the Fed did hike rates 75 Basis Points yesterday bringing their Fed Funds rate to 4%, the highest it’s been in 15 years… The dollar rallied on the announcement, and the BBDXY ended the day up 4 index points from the day before at 1,336…  You may recall that it was down to 1,325 in the early morning… But the rate hike did the trick for the dollar bulls.

Gold got taken to the woodshed after the announcement, and ended the day down $13, to close the day at $1,636.10…  And Silver lost 39-cents to close the day at $19.30…   One of these days, these folks out there that are calling for a stock market collapse, will get see it actually happen, and when it does, they’ll be all “See I told you so!” The end of the world, didn’t come yesterday at 2pm, and Armageddon was avoided… On to what Powell said, and then my take on it…

After telling the audience in his press conference yesterday that the Fed was not going to pause, and that they had more work to do with rate hikes. The audience kept asking him about when the Fed is going to pivot, and he stressed the following:

 “What I’m trying to do is make sure that our message is clear, which is that we think we have a ways to go. We have some ground to cover with interest rates before we get to that level of interest rates that is sufficiently restrictive. Putting that in [our] statement and identifying that as a goal is an important step, and it’s meant to put that question as the important one going forward.

I’ve also said that we think the level of rates that we estimated in September… the incoming data suggests that’s going to be higher… and that’s been the pattern… That will end when it ends, but there’s no sense that inflation is coming down. I have a table of the last 12 months of 12-month readings and there’s really no pattern. We’re exactly where we were a year ago.

I would also say it’s premature to discuss pausing, and it’s not something that we’re thinking about. The last thing is, I would want people to understand our commitment to getting this done and not making the mistake of not doing enough or withdrawing our strong policy too soon.” – Jerome Powell

Chuck’s take on this… I could sense that Powell was getting annoyed with the crybabies, that want the Fed to Pivot… Dare I say that he was the only adult in the room?

Oh, yes, these rate hikes are going to eventually slow the economy so much that a long recession and not your garden variety recession takes place… But that same thing happened in 1980, after Paul Volcker hiked rates to more than 5% over the inflation rate…  We not only experienced a recession, as I point out today, we experienced a double dip recession! 

Ok… So, I got that off my chest for today… Yesterday, told you that the Japanese yen was probably getting bought through intervention by the Bank of Japan (BOJ), and it occurred to me yesterday right after sending the letter out that this intervention by the BOJ was probably the reason we saw the dollar get sold in the previous two overnight sessions… And then watch the dollar come back during the U.S. Session…

It looks like it’s my day to explain stuff! HA! 

In the overnight markets last night…  things got even uglier for the currencies and metals in the overnight markets. The BBDXY is up 8 index points this morning, the euro has slipped another cent, the Aussie & Kiwi currencies have  lost their gains from two days ago, and the yen is back to getting sold this morning. With Oil perking up again, the Petrol Currencies are the only currencies that have any life to them right now. The ruble, real, peso  have at least held their ground, if not gained a bit VS the dollar, while the krone and sterling have other problems, namely their association with the euro, to worry about right now.

Gold is down $19 to start the day, and Silver is down 47-cents… The price of Oil is trading with an $88 handle again this morning, down $2 from yesterday’s figure. And Bonds…. The 10-year’s yield has risen to 4.18%, thus making all those buyers of the bond last week at less than 4% yield, losers right out of the starting blocks… Serves them right… Last week was NOT the time to buy bonds, a week before the FOMC was all but guaranteed to hike rates. There WILL be a time to buy bonds… It’s just not now, or next week… hold your horses…

Late last week we saw 3^rd QTR GDP come in positive at +2.6%, and everyone in the Gov’t was pointing to it and saying, “see? We told you we weren’t in a recession” …  I say hogwash!  Did these people never hear of a double dip recession?  The first two quarters of this year were negative, and that’s a historical description of a recession… So, that’s the first dip… And as we turn the calendar to next year, we’ll see the 2^nd dip…  Oh, and by the way, the 3^rd QTR GDP was boosted by exports of energy… Hmmm… Does that sound like something that’s going to continue, especially with the strong dollar?  I just wanted to get that off my chest, this morning.. That 3^rd QTR GDP print last week has been gnawing at me all week, and finally I figured it out… 

In the early 80’s, Then Fed Chairman Paul Volcker, was going crazy with rate hikes, shoot Rudy, one time he even hiked rates on a Saturday night, calling it the Saturday Night Special! He, like Jerome Powell now, was hiking rates to combat inflation that had ripped through the U.S. economy. The U.S. economy, had a double dip recession at that time, and it will again soon… I’m just saying, you either learn from history, or you suffer the consequences…

Yesterday, I left the price manipulators alone and really just alluded to them as to the reason Gold didn’t have any follow through…But not today!  I ran across this from Matthew Piepenburg of Matterhorn Asset Management…  I’ve quoted Matthew several times through the years, and used some of his writings in the FWIW section. Here, I think he corners the price manipulators and draws the perfect picture of them and what they are doing, Here’s Matthew: “There’s a specific interest in keeping the gold and silver price down because gold is a middle finger and an embarrassment to currencies that are failing. If gold were to go to 4,000 or 5, 6,000 an ounce Jay Powell and the Fed and Biden at the White House would be looking pretty embarrassed.” 

Well, India is the first across the digital currency finish line… here’s the skinny on that whey they did: India’s first digital rupee pilot project has been rolled out by the Reserve Bank of India. Digital rupee (e₹) will be used for issuing virtual currency for transactions in government securities. It’s not to be used, initially that is, as money by individuals…

I’ll keep an eye on this to see what develops…  You may recall a couple of years ago, when Sweden tried to use digital currency and then scrapped it months later…  

The U.S. Data Cupboard yesterday had the ADP Employment Report for Rocktober, and it came in stronger than anticipated at +239,000… Stores still have “help wanted” signs in their windows… And just the other day it was reported that nearly 11 Million job openings were there in Rocktober…  The economy still hasn’t recovered from being shut down 2 weeks, no wait, that’s wrong, It turned out to be a couple of months, not two weeks like we were promised…  Oh, well that’s water under the bridge now, and in our past, so far back now that I bet you had forgotten about that 2 weeks thing…

Today’s Data Cupboard has 3^rd QTR productivity, and Sept Factory Orders… Both of these were negative in their most recent prints, so maybe they turned things around, eh?

To recap… The Fed did hike rates 75 Basis Points yesterday, and disappointed all those still on the fence calling for a Fed Pivot. The dollar rallied on the news, of the current rate hike, and the rates still to come. Gold lost $13 on the day… The price of Oil gained $2 yesterday, and bonds added yield.  Chuck tells us what Jerome Powell had to say, emphatically no less, and then goes on to explain about how we’re probably going to see a double dip recession..

For What It’s Worth…  Well, let’s see… We’ve got a rail strike going to happen, we have less than 25 days of diesel fuel on reserve, and now this… Container giant Maersk is warning about next year… This article can be found here: “Dark Clouds On Horizon”: Maersk Warns About Rapid Economic Deterioration | ZeroHedge

Or, here’s your snippet: “A.P. Moller-Maersk A/S, the world’s largest owner of container ships and one of the best bellwethers for global trade, lowered its outlook for the growth of 2022 global container demand and warned next year could be worse.

Maersk’s warning about a slowdown in container demand and economic turmoil ahead was conveyed in a third-quarter earnings report released today and in an interview by the company’s top executive on Bloomberg.

The Copenhagen-based company lowered its outlook for the growth of 2022 global container demand to decline 2-4% from the previous estimate of plus or minus 1%. The forecast sent Maersk’s shares tumbling nearly 6%.

“However, it is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion. As anticipated all year, earnings in Ocean will come down in the coming periods,” Maersk wrote in the earnings report.

“There are plenty of dark clouds on the horizon,” the company continued, adding, “this weighs on consumer purchasing power which in turn impacts global transportation and logistics demand.”

It then warned: “With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession.”

Maersk CEO Soren Skou joined Bloomberg TV this morning for an interview where he said, “it’s really hard to be very optimistic with a war on our doorstep and a bigger energy crisis this winter so that is impacting consumer confidence and therefore also demand.” He added:

“Global trade is moving backward this year.”

The company expects the global container market to be “broadly flat to negative” as risks in 2023 are “skewed to the downside” due to the macroeconomic headwinds. Skou noted in the interview that it is “clearly better for the economy and for our customers” to have lower freight rates.”

Chuck again… Uh-Oh…  There’s one more thing to talk about today… I read this morning that POTUS plans to tax the windfall profits of the energy companies… And that reminded me of this passage of lyrics from the Beatles song: Taxman:  “I’ll tax the street (If you try to sit, sit) I’ll tax your seat(If you get too cold, cold) I’ll tax the heat (If you take a walk, walk) I’ll tax your feet ‘Cause I’m the taxman”

Market Prices 11/3/2022: American Style: A$ .6254, kiwi .5754, C$ .7252, euro .9736, sterling 1.1236, Swiss $.9863, European Style: rand 18.4855, krone 10.6349, SEK 11.2344, forint 419.48, zloty 4.8416, koruna 25.2047, RUB 61.92, yen 148.25, sing 1.4234, HKD 7.8499, INR 82.88, China 7.3163, peso 19.73, BRL 5.1465, BBDXY 1,344.51, Dollar Index 113.05, Oil $88.71, 10-year 4.18%, Silver $18.89, Platinum $919.00, Palladium $1,801.00, Copper $3.45, and Gold… $1,617.86

That’s it for today and tomorrow of course… I forgot to put my glasses on before I came downstairs to write this morning, so if there are some misspelled words, we can blame that on my bad eyesight! HA! The Astros’ pitchers last night NO-HIT the Phillies… WOW! The night after the Phillies hit 5 home runs, they got no-hit! It was a combined no-hitter, so Don Larsen’s record is still intact. Larsen is the only pitcher in World Series history to pitch a complete game no-hitter that was also a PERFECT GAME! So, I have a question for Dusty Baker, Astros mgr. Why wasn’t last night’s pitcher the Game 1 pitcher?  Our Blues get back on the home ice tonight VS the Islanders… Their games lately have been unwatchable, even for the staunchest of fans… Ugly hockey… But there’s nowhere to go but up from here… so they have that going for them!  Mizzou and Kentucky this Saturday… Fight Tigers, Fight!  Modern English takes us to the finish line today with their song: I Melt With You… a classic 80’s song for sure! I hope you have a Tub Thumpin’ Thursday today, a Fantastico Friday tomorrow, and will continue to Be Good To Yourself!

Chuck Butler

November 2, 2022

* currencies & metals rally on Tuesday… 

* Bond servicing costs are growing rapidly… 

Good day… And a Wonderful Wednesday to you… Yesterday was All Saints Day, and today is All Souls Day… An eerie beginning to the month of November if you ask me… It was a beautiful day here yesterday, so I spent most of the day outside… I had to take off the sweatshirt/ hoodie I had on, due to it being warm enough without it. That was a good thing! Last Friday, I had my monthly visit to my oncologist, and all my blood work was good, I had lost 2 more pounds, since last month, and she, my oncologist, was just giddy about how I was doing… So, I had that going for me, eh? I find that losing weight from here is more difficult, than at first… So, I’m diligent about my diet, and intake… The Babys greet me this morning with their song: Midnight Rendezvous…

The dollar recovered somewhat during yesterday’s U.S. session, from the ambush it received in the overnight markets the night before. The BBDXY, which was down 9 index points at 1,325 yesterday morning, came back to close at 1,332, which was still down 2 index points from the day before, but certainly not 9 index points!  The euro fell below 99-cents, after it was reported that Eurozone inflation had hit 10.7% in Rocktober.. That pretty much throws cold water on the European Central Bank (ECB) rate hike of 75 Basis Points last Thursday. That was the 3^rd consecutive, or in a row, rate hike by the ECB, and brought their internal rate to 2.0%… 2% VS 10.7%… Looks like inflation is winning, and will continue to win for some time, just like here in the U.S.

The Fed/ Cabal/ Cartel and the ECB are fighting inflation with a pea shooter…  But, at least they both say that they will continue to hike rates until inflation is back to 2%…   See why I say inflation will continue to win for some time for both?

Speaking of pea shooters… That’s what the Reserve Bank of Australia is employing also… The RBA hiked rates for the 7^th consecutive/ in a row, time the other day, bringing their internal rate to 2.85%, The RBA has lagged its kissin’ cousin across the Tasman, The Reserve Bank of New Zealand, in the rate hike race… This  rate hike, albeit, just 25 Basis Points, was the reason for the outperformance the night before in the Aussie dollar (A$) and kiwi.

Gold started the day up $22, but ended the day up $14.50, to close at $1,649.10…  Silver started the day up 70-cents, but ended the day up 45-cents, to close at $19.70… Just no follow through to the dollar selling and Gold buying from the previous night…  I would like to be happy about Gold’s $14.50 rise yesterday, but it’s watered down for me, as it should have seen Gold add to its overnight gain of $22, but it didn’t, and we all know why it didn’t so I won’t go there, in order to keep my blood pressure under control.

Oil remained with an $88 handle throughout trading yesterday, as the verdicts began to com in from our friends (NOT!) at OPEC on their announced Oil production cuts…  And the craziness in bonds ended with bonds getting sold yesterday and the 10-year yield rising back above 4%..

In the overnight markets last night…  Once again, the dollar got sold in the overnight session. The BBDXY is down 5 index points this morning, from yesterday’s close of 1,332.  Gold is up $8 in the early trading, marking two consecutive days of gains in the early trading… Let’s hope there’s some follow through today, for that would be a good sign of things to come. The markets are bracing for another aggressive rate hike from the Fed/ Cabal/ Cartel today, and I’m certain they will not fail to deliver. The only currency that looks to have benefitted from the sell off in the BBDXY overnight is the Japanese yen… I would have to think that any yen gains are from intervention by the Bank of Japan (BOJ). In recent days, the BOJ has spent more than $50 Billion to defend their currency… And for what?  Without a coordinated effort employing several other countries, selling dollars and buying yen, the BOJ’s efforts are all for naught…

Well, I’ve been keeping you up to date with the potential rail strike, and this past weekend news came down about how 70% of the union members voted the proposed new contract down… Uh-Oh…  This is dead serious stuff folks… It’s not like the distribution chain had been corrected and was working flawlessly and could absorb this news… This is like a double whammy for us folks! First the news that we only have 25 days of Diesel fuel supply, and now a rail strike…  I’ve instructed my wife to make sure she got the presents for the grandkids all bought soon, otherwise there could be some problems in the coming months…

I don’t know if I can be more forceful in my warning to you that this distribution chain problem is going to be BIG!  So… I’ll let Dave Gonigam and his 5 Minute Forecast, take it from here: “It is estimated that a railway strike would cost the U.S. economy over $2 billion per day,” says Jim Rickards.

“Railroad management are downplaying the possibility of a strike and claiming that the unions will see reason, or the administration will step in. That may be wishful thinking.

“The unions have concerns not only about pay but also about safety and health care that they feel have not been addressed.

“With supply chains already breaking down and the economy already weak, a major rail strike would all but guarantee a serious recession beginning in the fourth quarter of 2022. This prospect is definitely not priced into stock prices.”

Chuck again… So, now you have been warned…  I believe Jim is correct here in saying that this news is not being priced in the markets, especially stocks…  So, we have the FOMC hiking rates later today, and a rail strike on the docket, I can’t imagine those two things won’t be enough to bring stocks down… I’m just saying.

Did you happen to hear the news that former U.K. PM, Truss’ I-phone has been hacked, and they found a text from her to Anthony Blinken, U.S. Secretary of state, telling him, “It’s Done”, one minute after the Nord Stream Pipeline blew up… You may recall me telling you weeks ago that I suspected the U.S. to be behind the pipeline blow up, for they had the most to gain… Hmm… I certainly haven’t changed my mind on that, now, but have added the U.K. in the mix…

That news was reported by internet sleuth, Kim Dotcom, and while she hasn’t supplied real hard evidence of what she found, other than the words of the text, it’s difficult to believe that this isn’t real…

I’ll finish off today with an article that’s something I told you was going to happen, and now it is happening.. This from CNN.com “During fiscal 2022 alone, the federal government made $475 billion in net interest payments, up from $352 billion the prior year, according to the US Treasury Department. For context, that’s more than the government spent on veterans’ benefits and transportation – combined. And it’s nearly as much as the $677 billion spent on education.

By 2025 or 2026, the United States may hit a bleak milestone: Federal interest payments could exceed the country’s entire defense budget, according to Moody’s Analytics. For context, defense spending stood at $767 billion in fiscal 2022.

Although there’s little reason to doubt Washington’s ability to make interest payments, the surging cost to finance America’s $31 trillion in debt leaves less room for Congress to spend on other priorities, including everything from infrastructure and the climate crisis to the military.”

Chuck again…  Yes, remember when I told you that higher yields from rate hikes, would bring the bond servicing costs to a level that would not allow the Gov’t to spend on anything else?  Well… Mark this down for yet another time that Chuck warned us about something, and it’s coming true…

The U.S. Data Cupboard yesterday had the ISM Manufacturing Index, which slipped yet again, to 50.2, just above the line between contraction and expansion…This data tells us that U.S. Manufacturing is expanding at a very, very slow rate…  The other data saw Job Openings rise to 10.7 Million and the Jobs Quits come in at 4.1 Million…  Today’s Data Cupboard has the ADP Employment Report for Rocktober, as I aways say, this is supposed to be the precursor to the Jobs Jamboree that will take place on Friday this week.  And of course the FOMC rate announcement today at 2 pm EST… 

To recap… The ambush of the dollar in the previous overnight session, had no follow through in the U.S. session, and all the gains that were made in the currencies, and metals, were watered down by the close in the U.S. I guess traders thought, Hey! The Fed is going to hike rates tomorrow, why are we selling dollars?  Gold & Silver couldn’t add to their overnight gains, and lost some ground, to still gain on the day, but not as high of gains as they could/ should of…  The RBA hiked rates 25 Basis Points, and is using the same brand pea shooter to fight inflation as the Fed & ECB are using…  The rail strike is now upon us, what hell will it have on us, we’ll soon find out. And the overnight session saw dollar selling once again… 

For What It’s Worth… Now, this article, is FWIW worthy to the max! This is the stuff I wish I had all the time for this section! This article came to me from longtime reader, Bob, and it’s about 19 state Attorney Generals looking into prominent banks for collusion… This article can be found here:  Big League Politics – The News You Need to Know

Or, here’s your snippet: “19 state attorneys general nationwide recently launched a formal investigation into six prominent American banks alluding to legal concerns regarding banks’ “ESG” investing and their participation in a United Nations partnership with the aim of combatting CO2 emissions.

The Epoch Times reached out to one of the aforementioned AGa who said that the banks seem to be “appear to be colluding with the U.N. to destroy American companies” and subvert America’s national interests.

In a separate correspondence with another AG, Epoch Times learned that these environmentally radical policies would result in jobs being sent off to China due to the Chinese government’s policies that allow for coal-fired power plants to provide reliable forms of energy.

This recent investigation is one of the latest Republican state-level campaigns to combat companies that promote woke policies.

The banks being investigated include Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo Citigroup.

The aforementioned companies were served with civil investigative demands, which function as de facto subpoenas. These demands called on the banks to hand over documents connected to their involvement in UN-promoted global initiatives.

On top of that, the banks are being requested to provide details about their CEO’s involvement in the UN initiatives and how these decisions are made.”

Chuck again… OK, this borders on political stuff, I don’t argue that, but to me the main point here is that these Casino Banks have gotten pretty darn brazen with their activities and they need to have the reins pulled in on them…

Market Prices 11/2/2022: American Style: A$ .6423, kiwi .5881, C$ .7351, euro .9900, sterling 1.1504, Swiss $1.0039, European Style: rand 18.1123, krone 10.3385,SEK 11.0001, forint 412.11, zloty 4.7527, koruna 24.7456, RUB 61.52, yen 147.05, sing 1.4115, HKD 7.8490, INR 82.78, China 7.2811, peso 19.70, BRL 5.14.76, BBDXY 1,328.76, Dollar Index 111.28, Oil $88.55, 10-year 4.03%, Silver $19.80, Platinum $956.00, Palladium $1,905.00, Copper $3.49, and Gold… $1,657.84

That’s it for today… The Phillies are on a roll, and get to play the next two games at home, meaning if they sweep, they would win the Series and not have to return to Houston. OK… what was the best joke you heard on Halloween?  How about this one? “Why can’t pirates recite the alphabet?” “Because they get lost at C (sea)”    The jokes were pretty lame this year, and some of the trick-or-treaters were also lame because they came unprepared to tell a joke! The watering down of American traditions, continues… I’m just saying…  A song that’s very apropos for these next couple of days takes us to the finish line today, it’s Steely Dan and their song: Black Friday… “When black Friday comes, I’ll stand down by the door, And catch the gray men when they Dive from the fourteenth floor” yeah, that song… I hope you have a Wonderful Wednesday today, an All Souls Day, and please remember to Be Good To Yourself”

Chuck Butler

November 1, 2022

* Currencies & metals get sold on Monday… 

* But the overnight markets are a different story… 

Good Day… And a Tom Terrific Tuesday to you! And welcome to November, my most despised month of the year… I’m wishin’ and hopin’ and thinkin’ and prayin’ (Dusty Springfield) that this November will not be like previous Novembers… When I used to work, I had an assistant, named Christine, who was married to a high school basketball coach, and she and I would commiserate together about the start of the month of November… Hey! Christine! I still feel the same way about November, do you?  Our Blues have taken the road to ruins… They lost again last night 5-1!. On home ice no less! This ship is going in the wrong direction, what’s it going to take to get is steered correctly?  The late great, Leon Russell greets me this morning with his song: Tight Rope… 

I’m up on a tight rope, one side’s hate and the other is hope…  Those are lyrics to the Leon Russell song… And that’s what it feels like to me, in the markets these days… There’s hate that Jerome Powell is hiking rates, on one hand, and there’s hope that he’s going to defeat Inflation on the other hand.. .And to me, there’s no hope on either case.. But at least he’s trying, right?  Or, as some people would think, he’s bringing the U.S. economy to its knees on purpose, so that the dark side can then institute their new economy on all of us… OK, Ok, I said it was “some people”… I didn’t say it was a given thought!

So, we ended the month of Rocktober yesterday, on the same note that it was brought in, and that is with the dollar being bought, with no regard what-so-ever, that this dollar strength is making life difficult for countries overseas…  Dollar traders are like, “so what?, that’s their problem to deal with, not mine”… And they’re correct… So, we move on… The dollar got bought hand over fist again yesterday, and the BBDXY gained 9 index points on the day! The euro fell further below parity, and the other currencies all followed the Big Dog euro down… 

Gold lost $18 yesterday, in yet another engineered takedown, of the shiny metal. Silver also lost on the day, this time it lost $10-cents… Gold closed at $1,634.60, and Silver closed at $19.24…  I said yesterday, that with the FOMC meeting this week, and most likely announcing another 75 Basis Points rate hike, and then in the press conference calling for another aggressive rate hike in December, that the dollar would be the currency du jour this week, and when that happens, Gold, Silver and stocks get whacked!

The price of Oil remained trading with an $86 handle throughout the day yesterday… Our friends (NOT!) at OPEC will be finalizing their output cut of Oil in the next day or two, and that should underpin the price of Oil if you ask me… The OPEC members are looking for a $90 price in Oil… It remains to be seen if they achieve that or not… And Bonds… I’m telling you now, so listen to me later, that the price action in Bonds is very weird… I just don’t get it… Yesterday the 10-year’s yield dropped 2 Basis Points to yield 4.02%… That means investors were in buying bonds… Wait, What? Yes, they were buying the 10-year, with the FOMC waiting on deck to hike rates…  Tell me that’s just not weird!

In the overnight markets last night..  the dollar got sold… and yesterday’s gains for the dollar were wiped out. It was like yesterday didn’t happen… The BBDXY lost 9 Index points overnight, and Gold is up $22 in the early trading today… I can’t find anything out there that gives the reason for the buying during the day and the selling overnight…  Silver is up 70-cents this morning, the price of Oil is up to an $88 handle, and bonds… well, that’s another story… Somebody came in an bought tons of bonds last night, as the yield on the 10-year slipped below 4%, to 3.92%…  I’m scratching my bald head over that move…

The two best performing currencies overnight were the A$ and kiwi… kiwi, I get, and have a little feeling for the A$… So, it was about time, in my humble opinion for these two to get off their duffs and move higher! 

So, it was the witching hours for the dollar last night, and we start the ugly month of November, with the dollar getting sold, and Gold moving higher… Now that’s something I can get behind, and if it’s the chill winds of November that brings it on, then I’ll change my mind about November… No wait, no I won’t, those feelings toward November are here to stay for me!

I went pretty long yesterday with the Pfennig, and that will happen when I’m at a loss of things to do / watch, etc. and I start reading articles on the markets… You know, that back in the day, I had gathered quite a list of currency dealers that I talked to all the time… We knew each other’s wives name, kids, etc. and they would supply me with notes they received so that I could see what the traders were thinking… Many of these thoughts would appear in the Pfennig… But when I left EverBank, all those contacts, disappeared… I tell you this so that you know that I no longer have any inside information on the markets, but rely instead on articles online…  

Of course, all of my rants, are usually, just me thinking that things have gotten totally out of hand… 

Back at EverBank, whenever I went deep into something, I would get a call to Frank’s office, and he would tell me that I went too far… Then he would wink at me, and I knew that he was told he had to tell me I went too far, but he didn’t really want to have to tell me that. 

Ok, I digress, here, sorry..  in news of the weird…  the good folks at GATA sent me this from Reuters yesterday, “Central banks bought a record 399 tonnes of gold worth around $20 billion in the third quarter of 2022, helping to lift global demand for the metal, the World Gold Council said today.

Demand for gold was also strong from jewelers and buyers of gold bars and coins, the gold council said in its latest quarterly report, but exchange traded funds storing bullion for investors shrank.”

Now here’s the weird part… in the 3^rd QTR of 2022, Gold lost $144 in price… So, how could that be, if there was increased physical buying of Gold by Central Banks in the 3^rd QTR?  Riddle me this Batman… how does that happen?

Well, we all know how that happened… Price manipulators made sure that the demand from physical buying didn’t push the Gold price higher, as it should have. I’m going to say this one more time for all of you reading at home… This is the time to load up on Gold.. The price manipulators have made the price of Gold very cheap… And even if you’re not buying Gold to trade it at a higher price like a commodity, and not hold it like a store of wealth, then this is a great opportunity to buy it cheap…  I’ll not got through this again, so here it is, take it for what you went to … and leave the rest!

There are several Central Banks meetings this week, with not just the FOMC Meeting on the docket, the Bank of England (BOE) and the Bank of Japan (BOJ) will also meet this week… I expect rate hikes from 2 of the 3.. with the BOJ being the outlier…

The Bank of Japan (BOJ) has repeatedly said that they will keep their current Monetary Policy in place, and that means negative yields, and bond buying… They are the only Central Bank that everyone watches that has not taken their yields out of negative territory. And the yen has suffered for this transgression… I wouldn’t touch the Japanese yen with your ten-foot pole right now… So there!

Today’s Data Cupboard has the Job Openings and Job Quits, for Sept. and the ISM manufacturing index for Rocktober… I expect the ISM to fall below 50…. we’ll see if the powers that be allow that to happen…

To recap… The dollar got bought by the bushelful yesterday, and the BBDXY gained 9 index points on the day. The euro fell further below parity, and the other currencies all followed the Big Dog euro down…  Yen is back on the selling blocks after being bought last week in a bout of intervention by the BOJ, Gold can’t find a bid again… And Oil could be ready for takeoff after the OPEC announcement of a rate cut in Oil production.

For What It’s Worth…  I’ve been leaving out talk about Central Bank Digital Currencies (CBDC’s) lately, because there’s been little news to talk about, and my spider sense is telling me that’s how the powers that be want it, so it’s out of the minds of people, and when they’re ready to spring it on us, it’s a surprise, shock and awe, and no one is able to mount a challenge. This article brings us up to date, and it an be found here: CBDCs – The Pied Piper – International Man

Or, here’s your snippet: “We all know the story: The Pied Piper has a magic flute that, when played by the piper, saves the people of Hamelin from a rat epidemic. When the townspeople fail to pay him for his services, he uses the flute to attract their children away.

In modern nomenclature, a pied piper is described as “a metaphor for a person who attracts a following through charisma or false promises.”

And that leads us to a discussion of Central Bank Digital Currencies, or CBDCs.

As recently as ten years ago, when writing on the possibility of digital currencies being introduced, the idea was so novel (or perhaps so abhorrent) that my predictions on the subject were considered to be fanciful. Yet, by 2016, announcements were being made by governments that digital currencies were “under consideration.”

And in the brief time since, the concept has caught on worldwide. Eleven countries have now launched them, and another eighty-seven are either researching them or developing them.

But why is it that bank depositors would accept the introduction of CBDCs?

Well, on paper, they sound great. No more trips to the ATM. No more need for credit cards. No more worrying about carrying around cash. No more purse snatchers – you can carry all your savings on a cell phone and do so safely. All crime could end, as any criminal would leave a trail of transactions for banks to monitor.

And these, of course, are the promises that are being touted by the latter-day Pied Piper – the “false promises” mentioned in the definition above.”

Chuck again… the snippet doesn’t do the actual long article justice, so if you have the time to read it all, click the link above, and enjoy! Well, not enjoy, because it’s not a good story to enjoy…

Market Prices 11/1/2022: American Style: A$ .6463, kiwi .5897, C$ .7389, euro .9942, sterling 1.1561, Swiss $1.0007, European Style: rand 18.0934, krone 10.2409, SEK 10.9415, forint 408.97, zloty 4.7322, koruna 24.6092, RUB 61.47, yen 147.09, sing 1.4099, HKD 7.8498, INR 82.70, China 7.2585, peso 19.75, BRL 5.1414, BBDXY 1,325.35, Dollar Index 110.82, Oil $88.32, 10-year 3.92%, Silver $19.94, Platinum $955.00, Palladium $1,934.00, Copper $3.47, and Gold… $1,656.72

That’s it for today… So… how was your Halloween? I have to say that this was the lamest group of Trick-or-Treaters ever! Most of them didn’t even have a joke!  I had to tell them one to use! I told one girl that was dressed as a pirate, “What does it cost for a pirate to get his ears pierced? … Ready? … A Buccaneer! HAHAHAHAHA! She looked at me like I was an alien!  Oh well…There were some cutie little ones though… I sat outside in the driveway with the fire pit roaring, with neighbors, Paul and Lenore, giving out candy… Paul and I were out there with the fire too late for me.. But it was fun, and so I said what the heck!  Well, onto November…UGH!  The Black Keys take us to the finish line today with their song: I’m A Lonely Boy… I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler

Rocktober 31, 2022

* Currencies & metals get sold on Friday last week… 

* New leaders for the Banana Republics… 

Good Day… And a Marvelous Monday to you! Boo! It’s Halloween! One of my fave holidays, I have nothing but fond memories of trick-or-treating as a young boy, and then the fun I had with my kids as they grew to like Halloween too! Normally, my kids, all grown up now with families of their own, used to dress up their kids in their costumes and bring them over the weekend before Halloween… And this would be great family time… But not this year, Hmmm…  Oh, well, life goes on… My beloved Mizzou Tigers won on Saturday in S. Carolina, an upset for sure, and S. Carolina was ranked! Probably not any longer, but they were before the game! Fight Tigers fight for ole Mizzou! Kansas greets me this morning with their mega hit song: Dust In The Wind… 

Well, when I left you on Thursday, the dollar was rallying, and Gold was getting sold… Well, that trade sequence continued through Friday, with the BBDXY gaining 4 index points, to end the week at 1,325, and Gold was attacked once again, and lost $18 to close the week at $1,646.70, and Silver didn’t fare any better, losing 35-cents on the day, Friday, to close the week at $19.34… I know, I sound like a broken record here, but… These are the days that investors should be buying Gold & Silver, because with all the things wrong in the U.S. and I’ll get to some of them in a minute, Gold will eventually finds a bid, and run with it… Then it will be too late… I’m just saying…

The euro fell back below parity, with the dollar rally, and all the other currencies fell in place… There was a bit of news in the currencies this past weekend, and that is that China’s renminbi has become the 5^th largest/ most traded currency… That’s HUGE folks, as the so-called experts have said all along that there is no liquidity in renminbi, there aren’t enough traders dealing in the currency… Well, there may not be that many traders dealing in the currency in this country, but overseas, apparently it has become the currency du-jour…

The price of Oil remained steady Eddie to end the week training with an $88 handle… While Bonds, well, bonds are a mystery to me right now… I had thought, and so written that the bond boys had finally has the light bulb over their collective heads, and see that the Fed was not going to pivot, now at least, and that they should be behind a yield rise… This was going along OK, until this past week… This past week, traders and investors have been buying bonds… They obviously feel that yields won’t go higher, as the Fed hikes rates on Wednesday of this week and again in December. Any-old-way, I’ve got something for you on the Treasuries in the FWIW section today, you won’t want to miss that one!

Not that I want to talk about stocks, but the tech stocks sure got hammered with their poor earnings last week…  And this will continue with other sectors too, as inflation has hit these companies hard, right between the eyes, and they are seeing their costs to operate explode higher, and it’s not because they are paying workers higher wages… In fact, wages have not kept up with in inflation, so not only is the Company seeing losses so too are their employees…

In The overnight markets last night…  The dollar buying continued, with the BBDXY gaining 7 index points overnight. I would think that the pending rate hike from the FOMC is the cause of this dollar buying, but then if traders were really thinking it through, they would come to my thought, that even though the Fed is hiking rates, inflation is still strong… Gold has lost $8 more overnight, and the price of Oil has lost $2 overnight.  I have a feeling that this week will bring about a lot more dollar buying, as those that are still hanging on to their hopes of a Fed Pivot, capitulate, and throw in the towel…

On Friday last week, we saw Consumer Spending rise 3.8%… And the economy was being lauded for having such resilient consumers… Here’s the thing that these knuckleheads didn’t take into consideration… It’s not that consumers were buying more goods, it’s simply a factor of Consumers paying more for those same goods! It’s inflation, doh! I can’t believe that not one economist talking about the rise in Consumer Spending associated the rise with inflation being so high…   I guess they didn’t have my lessons in economics that I took many years ago, when they still taught you about Adam Smith, and the invisible hand of the economy… 

So, the dollar rallied on Friday, on the data, apparently, or so I’m told in articles that I read this past weekend. You know for sure when a currency rallies on both good data and bad data that it’s in a bull market trend…  This bull market trend for the dollar is getting a little long in the tooth, and there will come a time, when everyone says, “no mas”, on buying dollars.. . And the bear market trend for the dollar will emerge… But not until then… So, we have to be patient and wait…

Well, I read this past weekend that mortgage rates have hit 7%… I’m convinced that the younger crowd of people have never seen mortgage rates this high, and years ago, this 7% rate would have been thought to be accommodating… Not it is thought to be strangling housing…  7% is still 1/2  of the rate I paid on my first mortgage!

OK… The U.K. has their 3^rd Prime Minister in the last 3 months! This has really kind of made me think of things that happen in a Banana Republic! Despite all the problems that exist in the U.K. right now, the pound sterling isn’t being affected by it… Sterling is trading with a 1.15 handle, and has been for a couple of weeks now. Yes, it’s weaker than it was last year, but it’s stronger than it was a month ago! I had a dear reader ask me if I liked GBP (sterling) and I said, “no… they have too much debt, too high inflation, and too low of interest rates right now” And they just acted like a Banana Republic!

As far as things that I fearful of going on right now, number 1. Is all the saber rattling going on between the U.S. and Russia…  2. The economy slowing to a snail’s pace, worse than the last 10 years of just 2.1 % growth. 3. Runaway inflation 4. The country’s debt, Gov’t, State, Corp, and individual… 5. That we’re not the only country with a debt problem… The DEBT to GDP worldwide is 350%!!!!!!!   Here in the U.S. it’s 140%…  In 1985, the countries of the world came together and decided that the U.S.’s Current Account Deficit / GDP ratio, which was 2.5%, was too high, and that the world would begin to sell dollars… this was known as the Plaza Accord, because the meeting took place at the Plaza Hotel in NYC. The U.S.’s Current Account Deficit is unknow any longer, because they don’t report it… Don’t want people to worry about it? Don’t report it, out of sight, out of mind…  But given the Debt of the Gov’t, I would think that the Current Account Deficit is much larger than the 2.5%, the Finance Ministers were so worried about back in 1985…

The issuance of Treasuries is how the Gov’t finances their deficit spending boondoggles. And by and by in the past couple of years, we’ve had Russia, China, India, and now Japan not show up at the Treasury Auction window… Uh-Oh…  When push comes to shove, and there’s no one to buy our Treasuries in the truck load amounts that we sell them in, The Gov’t will 2 choices… Behind door number 1 is… greatly reduce deficit spending so that so many Treasuries don’t have to be sold… or 2. Raise the interest rates of the bonds/ yield, to attract buyers… 

But if you raise interest rates too much, you go broke, servicing the debt…  Well, we as a country are broke already, so what the problem going more broke? Ahhh Grasshopper… You’ve asked a very good question… When the Gov’t taxes people, the taxes they receive fund the Gov’t. But when they’ve spent more than they took in, this has to be financed, and the bonds you sell will have an interest rate that you have to pay, which becomes a part of your deficit spending.

Onto other things rather than dwell on our pending economic collapse… Brazil has a new leader, but he’s an old leader, who once ran the country, but has returned, with a twist that is… Here’s the USA Today on the subject: “Twenty years after first winning the Brazilian presidency, Luiz Inácio Lula da Silva defeated incumbent Jair Bolsonaro on Sunday in an extremely tight election that marks an about-face for the country after four years of far-right politics. It is a stunning reversal for da Silva, 77, whose 2018 imprisonment over a corruption scandal sidelined him from the 2018 election that brought Bolsonaro, a defender of conservative social values, to power.”

Chuck again… another Banana Republic for you…

And finally, the FOMC will meet this week… It’s one of those two-day meetings, so all the board games will be out on Tuesday… By Jerome! You’ve sunk my battleship! Pretty good association there, eh? Since Jerome is sinking the economy… But I digress…  There still are folks out there convinced that the Fed Heads will pivot and begin to cut rates again… Well, there’s that little thing called inflation that’s stopping them from doing that right now… So… in my humble country boy opinion, I expect the Fed Heads to hike rates 75 Basis Points on Wednesday, and then in 6 week, (middle of Dec) I expect them to come back with yet another 75 Basis Points rate hike, to end the year at 4.75%… Still way below the inflation rate, but in the eyes of the Fed heads… That will be enough, and as we turn the page on the calendar to 2023, all the talk will be about the next Fed meeting, and how they will be ending their rate hikes… That’s how I see it playing out, so there!

The U.S. Data Cupboard doesn’t have much for us today, just a regional (Chicago) manufacturing index… Last Friday was datapalooza! The PCE (Personal Consumption Expenditures) the Fed Heads’ preferred inflation calculator, remained high, with the year-on-year rate staying at 6.2%…  The Employment Cost Index for the 3^rd QTR actually fell from 5.4% to 5.1%… This ties into what I was talking about earlier that wages aren’t rising, causing wage inflation. We already talked about the Consumer Spending print…  In addition to those prints on Friday, we also had the U. of Michigan Consumer Confidence index for Sept, and it remained the same at 59.9… And finally, we had the pending home sales that collapsed in Sept, falling 10.2%!   This is just another brick in the wall (Pink Floyd) that’s adding up to a housing bubble bursting…

To recap… The dollar selling that was going on last week, hit a snag as we headed into the weekend, and dollar buying had replaced what was going on earlier in the week. The BBDXY gained 4 Index points on Friday, and there was yet another engineered takedown of Gold, which lost $18 on Friday. The euro fell back below parity, the U.K. has a new PM, and Brazil has a new President…. Chuck goes through his list of things he’s concerned about right now…And the FOMC meets this week to hike rates once again…

For What It’s Worth…  This article came to me from a dear reader, (Kevin) and I thought it to be quite FWIW worthy, it’s about a potential coming crisis in Treasury liquidity, and it can be found here: Stocks Could Sink 25% As Treasury Liquidity Crisis Risks Spillover (businessinsider.com)

Or, here’s your snippet: “A liquidity crisis is brewing within the $24 trillion US Treasury market, and the turmoil has the potential to sink stocks as well as cripple financial markets more broadly, according to analysts.

Bond yields have seen big swings as a lack of liquidity has widened the price gaps between investors buying and selling Treasuries. That means trades that didn’t move the market before are now creating more volatility. Rate-sensitive growth stocks are especially vulnerable as borrowing costs are already rising on Fed rate hikes.

In fact, Treasury liquidity is showing signs of weakness not seen since the Great Financial Crisis, warned James Demmert, founder and managing principal at Main Street Research.

“One has simply to look back at 2008 or the pandemic to understand the seriousness of a liquidity freeze — particularly in the US Treasury market — which is deemed to be the most liquid market in the world,” he said. “A liquidity crisis would most likely extend the current bear market in stocks to much deeper levels in the range of a further 20-25% or total of 50% for the year.”

The liquidity crunch comes as the biggest buyers of US Treasuries are pulling back. For example, Japan has historically been a top buyer of US debt but has sold dollar-denominated assets recently to prop up the slumping yen as the dollar surges. Meanwhile, the Federal Reserve stopped buying bonds is now shrinking its balance sheet.”

Chuck again… yes, I’ve told you, dear reader, time and again, how countries were stepping away from the Treasury auction window… This article describes that very thing…  Uh-Oh! Liquidity is important, and it’s not a liquidity crisis, until it is, so this is putting the cart in front of the horse a bit, but still, it’s important to know this is going on and the potential for it to happen… 

Market Prices 10/31/2022: American Style: A$ .6388, kiwi .5801, C$ .7325, euro .9930, sterling 1.1533, Swiss $1.0003, European Style: rand 18.3596, krone 10.3842, SEK 10.9959, forint 413.99, zloty 4.7484, koruna 24.6794, RUB 61.71, yen 148.68, sing 1.4151, HKD 7.8492, INR 82.77, China 7.2999, peso 19.89, BRL 5.3312, BBDXY 1,332.32, Dollar Index 111.19, Oil $86.55, 10-year 4.04%, Silver $19.16, Platinum $926.00, Palladium $1,887.00, Copper $3.42, and Gold… $1,648.65

That’s it for today… Boo! What an ugly day yesterday, with rain and dreary skies all day… The rain is supposed to end early today, and then just be chilly for tonight’s trick or treaters… What’s going on with our Blues? 4 game losing streak will be on display tonight when they play the Kings… I kept waiting for that “Mizzou Moment” when they shoot themselves in the foot, to cause them to lose the game on Saturday, but it never came, and I was so happy for all their fans, which includes me! This coming Saturday, they take on a team that has been their kryptonite… Kentucky… Time to put that to an end! All right, now, got to get the firepit out, dry some wood, and get ready for the Trick-or-Treaters… I hope you have a Happy Halloween… The Allman Brothers take us to the finish line today with their song, which is also my favorite Allman Brothers song: Melissa…  Be sure to have a Marvelous Monday today, and please remember to Be Good To Yourself!

Chuck Butler