Author: admin

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

Rocktober 27, 2022

* currencies & metals rally again on Wednesday

* dollar selling ends in the overnight markets last night

Good Day… And a Tub Thumpin’ Thursday to one and all! Heading into this last weekend of Rocktober, the weather is near normal here, a little chilly, but still full of sunshine. Well, at least that’s what we had yesterday.. Today, is a new day… Good friend, Duane and I had a great lunch yesterday, and at one point of the day, he said, “This is how retired folks spend their Wednesdays”…  I responded, “and Tuesdays, and Thursdays!” We’re drawing closer to Halloween… I saw more Halloween decorations out in Florida than I’ve seen here… UGH! When Alex was a young lad, we used to go all out on decorating the house with Halloween stuff, but now that it’s just me & Kathy, well… that doesn’t happen any longer! Kathy sewed/ made little Evie’s Anna outfit, I can’t wait to see her in it! Kansas greets me this morning with their song: The Wall… 

Well, yesterday’s dollar action, wasn’t as harsh as the previous two days, but the dollar still got sold yesterday, and the BBDXY lost 3 more index points. The euro climbed higher above parity, and even the Japanese yen rallied VS the dollar. I’m thinking that all of the dollar selling by Chinese banks that I told you about last week, and the $50 Billion that the Bank of Japan spent last week selling dollars, and buying yen, have accumulated to a massive problem for the dollar rally. Yes, the free fall that the dollar was in the first two days of this week, ended yesterday, but the selling continued.

Gold, gained $12.40 yesterday to close the day at $1,666.50, and Silver gained 24-cents to close the day at $19.67…  Ahhh, 1967, the year of The Summer of Love, when Scott Mackenzie sang, “if you’re going to San Francisco, be sure to wear some flowers in your hair”… Sorry, I digress…

The price of Oil bumped higher and traded at the end of the day with an $88 handle… Maybe, just maybe, because you never know, people are starting to realize how dour the oil supply situation is here in the U.S. maybe, eh? I know someone who has noticed it… Check this out..

“ Saudi Oil Minister Abdulaziz bin Salman said Yesterday when telling a conference that, ‘People are depleting their emergency stocks, had depleted it, using it as a mechanism to manipulate markets while its profound purpose was to mitigate shortage of supply. However, it is my profound duty to make it clear to the world that losing emergency stock may become painful in the months to come.”

Man, when I read that, my spider sense was not only tingling it was flashing red that I fear a problem going forward getting needed Oil from OPEC…  I hope I’m wrong about that, but if you read what he had to say, you have to have the hairs on the back of you neck to stand up!

In The overnight markets last night… Well, the rumors of the dollar’s demise have been greatly exaggerated. The dollar rallied in the overnight markets last night, with the BBDXY gaining 4 index points, which sent Gold down $6 in the early trading today, with Silver following Gold, and is down 32-cents as we start our day. The folks at Morgan Stanley issued a report saying that “It’s too soon to write off the dollar’s dominance as the US rate-hike cycle may not be near its peak.”  Well, that may be the fact, but there’s something behind the free fall the dollar was in to start the week, I’m just saying…

The price of Oil was steady Eddie overnight, and trades this morning with an $88 handle. Bonds, too, were steady, and the drop in the 10-year’s yield was halted… Just last week the 10-yr’s yield was 4.17%, and today it’s 4.07%. this drop of in yield, represents buying by the truckload and hints of Central Bank buying, but that can’t be our Central Bank because they are out of the bond buying business, right? Wink, wink…

The European Central Bank (ECB) is meeting this morning, and will wrap it up probably right as I’m hitting the send button… I’m sure that the ECB will hike rates again at this meeting, to get them going on their fight with inflation that is actually higher in the Eurozone than it is here, that is, as long you believe that inflation is only 8.2%…  The idea that the ECB will hike rates, has helped the euro climb back above parity…

The Fed Heads will have their FOMC meeting next week, it’s one of those 2-day meetings, where on the first day the Fed Heads get out the board games, and play them… By Jerome, you’ve sunk my battleship!

I kid there, but what I’m about to tell you is dead serious…  I’ve told you before that Bill Bonner says that the Fed Heads can either “inflate or die”…  And that is a trap… A great Big TRAP,  you see, that the Fed Heads can continue to hike rates to fight inflation, but they’ll never get to an interest rate that’s higher than the inflation rate, so they’re really fighting a war with rubber bullets…  But by hiking rates they are slowing down the economy, which was really slow to begin with, and had been for the last decade… Most observers think the U.S. will be dragged into a deep recession, by these rate hikes.

But what’s a Fed Head to do? For if they decide to begin to cut rates again, and print currency again, then the inflation will be stronger and much more difficult to bring under control. So, the Fed Heads can either choose to inflation, and watch the economy slowly die from weight of inflation, or they can continue to hike rates to combat inflation, and bring the economy to its death… Either way, we’re up the creek without a paddle,

And knowing that, you now know why I have not understood the buying of dollars to the hilt like traders and investors were doing.. Sure interest rates are higher here than in the Eurozone, and Japan, but not in New Zealand, Russia, the U.K. and others…

Remember the game “Mousetrap”… no matter what went on, the mouse always got trapped! Think of the Fed Heads as the “mouse”…

OK… Reuters reported this yesterday: “U.S. students have suffered historic learning setbacks with math and reading scores falling to their lowest levels since before the COVID pandemic, national exam results showed, the latest sign of the damage school closures wrought on children”

Hmmm… I’m glad my kids are grown and out of school, but my grandkids are not and will have to make up major ground to catch up with the rest of the world…  

Back to markets… The U.K. has a new Prime Minister, and it appears that the U.K. is taking notes on putting people in high positions in Gov’t from the U.S….  As the new PM is an alum from Goldman Sachs! Here are the folks at www.wallstreetonparade.com  “The newly installed U.K. Prime Minister, Rishi Sunak, (the third P.M. in seven weeks) has scrubbed his Goldman Sachs and hedge fund career from his LinkedIn profile and from his official government bio. But, unfortunately for Sunak, those careers have been assiduously chronicled in countless newspaper articles for more than a decade – and not in a good way.”

Good luck to the new PM… he’ll need it in a BIG WAY! Pound sterling has really rallied this week, as the dollar sank, and a lot of that upward move can be attributed to the news that a new PM was to be named… 

The U.S. Data Cupboard yesterday had Sept New Home Sales, here’s the skinny on that: September home sales tumbled 10.9% vs August. This leaves new home sales down 17.6% YoY which is in line with the trough of the COVID lock-downs (and unchanged since July 2016)… I think that the Sept data is the beginning point of the rot in Housing… I guess we’ll see as we go along.

Today’s Data Cupboard is chock-full-o-data… First up is the first reading of 3^rd QTR GDP… After two consecutive quarters of negative growth, we couldn’t possibly have a 3^rd QTR of negative growth, now could we? Don’t put too much thought into the first print though, because they’ll be at least 3 revisions of the data going forward.  Next up is the usual Tub Thumpin’ Thursday fare of Weekly Initial jobless Claims, and following that print will be Durable Goods and Capital Goods Orders for Sept.  August’s Durable Goods Orders were negative, so I’m looking for some kind of improvement there, if not, then it feeds the thought that the recession is getting worse…

For What It’s Worth… Ok, thanks to longtime reader, Bob, for sending this to me, this is an article that’s on zerohedge.com and it’s title is: It’s Just Not Right”  And it can be found here: “It’s Just Not Right” – One Trader’s Rage Spills Over At “Incompetent, Untrustworthy, Unaccountable” Fed | ZeroHedge

Or, here’s your snippet: “Less than a month ago, no lesser member of the cognoscenti than Mohamed El-Erian unleashed his latest tirade at The Federal Reserve’s “challenged credibility”, warning that:

“The Fed’s latest moves are consistent with a central bank that is continuously scrambling to catch up with realities on the ground. It is the kind of thing that one typically finds in developing countries with weak institutions, not in the issuer of the world’s reserve currency and the custodian of the world’s most sophisticated financial markets – where many other countries and companies entrust their savings…

The comparison is even more troubling when one considers what the recent market turmoil implies.”

As he explained even more recently, most economists, investors and traders have by now largely internalized that the global economy and financial markets are navigating three regime changes:

Predictable injections of central bank liquidity and floored interest rates have been replaced by a generalized global tightening of monetary policy.

Economic growth is slowing significantly as the three most systemically important regions of the global economy lose momentum at the same time.

The nature of globalization is shifting from the presumption of ever closer economic and financial integration to greater fragmentation in part because of persistent geopolitical tensions.

Both by themselves and collectively, these three changes involve increased economic and financial volatility.”

Chuck again… Like I said earlier this morning, the Fed Heads are in a trap… On one side, you have economists that are more worried about inflation , and on the other side you have economists that are more worried about what the rate hikes will do to the economy… I guess the latter of the two groups, aren’t concerned with what inflation will do to the economy!

Market Price 10/27/2022: American Style A$ .6452, kiwi .5802, C$ .7349, euro 1.0036, sterling 1.1560, Swiss $1.0097, European Style: rand 18.0880, krone 10.2945, SEK 10.8965, forint 408.20, zloty 4.7333, koruna 24.4489, RUB 61.67, yen 146.29, sing 1.4090, HKD 7.8491, INR 82.50, China 7.2362, peso 19.98, BRL 5.3818, BBDXY 1,321.78, Dollar Index 110.11, Oil $88.34, 10-year 4.07%, Silver $19.35, Platinum $946.00, Palladium $1,958.00, Copper $3.49, and Gold… $1,660.78

That’s it for today… Geez, Louise, I must have really jinxed our Blues, because ever since I talked about them starting the season on the right skate, they’ve scored 2 goals in 3 games! YIKES! Our Goalie had to stand on his head to keep the Blues in the game last night… Memo to coach Berube: I’m sorry, I won’t talk nice about them again! Adam Wainwright is returning for his 18^th season, for my beloved Cardinals, it was announced yesterday. The Cardinals have had 3 coaches leave the team, hitting, pitching and bench coaches are needed… Let’s see, we just had some players retire, let’s get Albert Pujols to be the hitting coach, Adam Wainwright to be the pitching coach, and Yadier Molina to be the bench coach! There! That’s done, and taken care of! Next?  Mathew Sweet takes us to the finish line today with his song: Girlfriend… Mathew Sweet was big in the 90’s, but I haven’t heard anything from him in some time… UGH! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… Monday is Halloween! BOO I hope you remember to Be Good To Yourself!

Chuck Butler

Rocktober 26, 2022

* Currencies & Metals rally on Tuesday and overnight

* The Silver shortage is real… 

Good Day… And a Wonderful Wednesday to you! What an absolute ugly day yesterday, weather wise, here in the MidWest… Cold, raw, rainy, foggy, windy, all of those rolled into one day, and I had to go out in it to the ocularist… My eye prosthetic had to be “adjusted”, as it had been bothering me quite a bit lately. No baseball on TV last night, as the World Series doesn’t get started until Friday night, and with it being a Tuesday, there were no football games either… And my Blues weren’t playing, so… that led me to my laptop to read… Normally that means a very long Pfennig for you, but not today, most of what I read just repeated the same stuff… The 17-minute version of Pink Floyd’s song: Shine On You Crazy Diamond, greets me this morning…

Well, another day when the for no reason at all, other than a collapse of the housing prices data, and we all know that fundamentals don’t work that way any longer, the dollar got sold like funnel cakes at a State Fair. The BBDXY lost 11 index points and fell to 1,329 to end the day. The euro climbed to .9960, as traders thought, as long as the dollar is getting sold, and the European Central Bank meets on Thursday this week, we might as well give the euro some love… Gold had a near $10 turnaround on Tuesday, after being down over $6 in the early trading, Gold fought back to end the day up $3.40, with a price of $1,654.10. Silver also fought back, after being down 39-cents in the early trading, it gained 12-cents on the day, with a price of $19.43…

The price of Oil gained $2 to end the day with an $85 handle, and bonds gave back more yield yesterday… Apparently, the Mary Daly (Fed President S.F. Fed) comments must have had something to do with bonds yesterday… The 10-year’s yield dropped to 4.10%…

The Japanese yen is back to getting sold, after the Bank of Japan (BOJ), apparently blew through $50 Billion last Friday in an attempt to save the yen by selling dollars and buying yen…  Long Time, and I mean real Long Time readers, will recall the days when I talked about “Mr. Yen”…  Well, he’s back in the news, and I found this quote from him… “ The Japanese currency could weaken even further to 170 levels against the U.S. dollar next year, according to Japan’s former vice minister of finance for international affairs, Eisuke Sakakibara.

Sakakibara, known as “Mr. Yen” for his efforts to influence the currency’s exchange rate through verbal and official intervention in the late 1990s, said he expects the currency to depreciate further as it hovers near its weakest levels in 32 years.”

In The overnight markets last night…  There was follow through from the dollar selling in the U.S. session, as the BBDXY lost 9 more index points overnight. The euro has climbed back above parity, pound sterling gained, Aussie and kiwi jumped higher, and even the Japanese yen rallied a bit! Gold is up $16 in the early trading this morning, and Silver is up 19-cents, with both looking like they are ready for take-off! Recall, that I told you that it might come to this, a point, where the dollar tops out, and no longer grows to the moon… I’m not saying that’s it, that’s all for dollar strength, what I’m saying is, that it’s pretty suspicious that the dollar has turned around quickly, and with force… The BBDXY is down 20 index points since Monday… So to borrow a lyric from John Fogerty… “So Say Hey Willie, tell Ty Cobb and Joe DiMaggio; Don’t say “it ain’t so”, you know the time is now.”   

The price of Oil has risen in the $85 handle, and someone please tell me why they are buying bonds now?  The yield on the 10-year Treasury has fallen again and trades this morning with a 4.06% yield!  Memo to you bond buyers: The Fed is going to hike rates next week, and then again in December, do you really think it’s time to buy bonds now? C’MON! 

OK, I mentioned Mary Daly’s comments above so here they are: “Federal Reserve Bank of San Francisco President Mary Daly who has consistently reaffirmed the central bank’s commitment to curb inflation by raising interest rates, surprised investors by stating that the time has come “to start talking about stepping down” the pace of rate hikes. Daly’s comments were taken as an indication that the magnitude of further interest rate hikes could soon diminish.

Chuck again… Uh-Oh… suddenly, the Fed Heads aren’t singing from the same song sheet… And that by itself is reason to sell the dollar. This will be interesting to see how this all plays out at the FOMC meeting next week, where a 75 Basis Point rate hike is fully expected, but what will Jerome Powell say in his press conference afterward? Will he remain vigilante about hike rates aggressively, or will he begin to cow tow to the Casino Banks?

In Australia yesterday, their latest reading on inflation, saw CPI rise 7.3%, way above expectations, and that has put the Reserve Bank of Australia (RBA) back on notice… The markets are saying that the RBA turned dovish at their last meeting only hiking rates 25 Basis Points, and this latest CPI data will make them think fast.. or at least it had better, according to the markets.

So, if running strong inflation is good for the U.S. dollar, it must be good for the A$, and the A$ took the rise in inflation and ran with it to gain about ¾’s of a cent on the day. I know, it sounds weird, but that’s our “opposites trading” that exists today…

In our country’s game of whack a mole… The backup in California of ships out to sea, is over, as there are only 4 ships left out to sea, but now we have to deal with the lack of diesel, or the price of diesel as a roadblock to delivering goods across the nation. The rail strike is also looming as a real roadblock too, So, you snuff out one problem and get two more!

Britain has a new Prime Minister… Rishi Sunak, said he would try to fix the mess left by his predecessor, restore faith in politics and tackle a “profound economic crisis” but warned the country there would be difficult decisions ahead.”…

Well, what else did you expect him to say, “This country is in a world of hurt, with staggering inflation, more debt than we should have, and a teetering economy”?  Now, c’mon that won’t get anyone elected! But it sure would be the truth!

Ok, so remember a couple of weeks ago, when I said that I thought we could very well be heading for a decade of stock non-performance? Well, I found this on Seeking Alpha yesterday, “From “the Jan-2021 S&P 500 (SP500) (NYSEARCA:SPY) high (4,800 nominal, 5,100 real) we see the P/E ratio halved the 10 years 2021 to 2031E offset by EPS doubling in the same period (7.2% CAGR), leaving the S&P 500 price about flat in 2031 versus 2021 in real or nominal terms,” strategist Barry B. Bannister wrote in a note.”

Chuck again.. no, this isn’t going to be turned into a stock letter… But when someone out there that is a stock analyst, seems to walk in the same circle that I am, then I have to bring it to your attention! Oh, and this Barry Bannister works for Stifel Nicolaus… I sent my good friend, Rick B. a note yesterday and had this link to the story and said, “someone at your firm is reading the Pfennig”….  

Why do I see all this bad stuff for the next decade? Because of our debt, and our inability to reduce it or even stop adding to it. And our need as a country with all that debt to have inflation to eat away at the debt…The Fed Heads are talking a good game right now about fighting inflation, but… here’s the thing that sticks in my craw… The Fed Heads say they want inflation at 2%… Well, even at 2%, over 10 years, you have a lot of problems.. .But they are of the opinion that Joe 6-pack doesn’t understand that, and therefore no one will be storming the gates of the Eccles Bldg…

I have a question for anyone that will entertain it and maybe give me an answer… “Is our POTUS on the phone with Putin, trying to work out an peaceful solution to this mess? 

I’ll get a few readers who see that as me talking politics… and I see it as me talking logics… .For if this continues to escalate, nothing that we know of that exists, will be gone… I’m just saying.. .

OK.. Well, first it was the Shanghai Gold Exchange that came into existence a few years ago, and we all had high hopes that they would not allow futures contracts so no way the price manipulators could fudge the price of Gold… But that’s never really materialized here…  Now we have the new Gold exchange in India… Here’s an article that the good folks at GATA sent me, from the Indian Times that can be found here: BSE launches electronic gold receipts – Times of India (indiatimes.com)

“Leading stock exchange BSE has launched its electronic gold receipts on its platform, a move that will help in efficient and transparent price discovery of the yellow metal.

The exchange has introduced two new products of .995 and .999 purity during the Muhurat trading on Diwali and trading will be in multiples of 1 gram and deliveries in multiples of 10 grams and 100 grams, the exchange said in a statement.”

Chuck again, this could take India from being a price taker, to price maker… 

The U.S. Data Cupboard yesterday had the Case-Shiller Home Price Index (HPI) from August yesterday, and I told you above that the index had collapsed in August, and the 9.8% drop of home prices was the proof. Consumer Confidence fell from 107.8 to 102.4…  Well, that looks like it’s at least going the right direction… Not that I’m rooting for bad stuff to happen, it’s just that the this index hadn’t been showing the real truth in the confidence of the economy…

Today’s Data Cupboard is lacking at best… Just one of those days… We will see New Home Sales data, but we all know where that’s going… so, move along now, for these are not the droids we’re looking for!

To recap… The dollar got sold yesterday, it could have been Mary Daly’s comments, or it could have been the HPI dropping from the sky, either one, would, in the old days of fundamentals, be suffice for our reason the dollar got sold. The BBDXY lost 11 index points, while the euro rose in the 99-cent handle, and Gold fought back from being negative to start the day to close up $3.40…  And there was follow through in the overnight session last night with the BBDXY losing 9 more index points. That’s 20 index points since Monday, and the euro has climbed back above parity!

For What It’s Worth…  Yesterday, I talked about the shortages in Silver and Copper… I highlighted Copper yesterday, and today I have an article about the shortage that’s happening right now in Silver, and that article can be found here: “COMEX Deliverable Silver far less than imagined as 50% of ‘Eligible’ is not Available (bullionstar.com)

Or, here’s your snippet:” During September, silver inventories held in the vaults of the London Bullion Market Association (LBMA) in London fell by a massive 4.93%, and are now at a new record low. LBMA silver holdings now total only 27,101 tonnes (871.3 million oz.), and have fallen every month for 10 straight months.

Over on COMEX in New York, the Registered silver total is now only 1,186 tonnes (38.13 million oz.), a five year low. During September, the LBMA vaults in London lost 1,404 tonnes (45.166 million oz.) , which is more silver than in the whole COMEX Registered category.

The LBMA even conceded in its latest update on silver vault stocks in London that “some contributors noted that increased client demand led to a number of physical silver exports“. The contributors here refer to the vault operators within the London LBMA market, which are HSBC, JP Morgan, ICBC Standard, Brinks, Malca Amit, and Loomis.

Nicky Shiels, precious metals analyst for MKSPAMP, echoed that view when reporting back from the LBMA’s annual conference in Lisbon last week, when she said that conference delegates predicted a “super bullish Silver [price] ($28.30!)” in a year’s time “as the focus was on physical tightness driven by unprecedented demand“.

An important contributor to this ‘unprecedented demand’ for physical silver is India where silver imports have been zooming ahead. Silver imports into India totalled 1,812 tonnes in July, 1,149 tonnes in August and initial estimates for September are about 1,700 tonnes. Up until August 2022 (8 months), India’s silver imports totalled 6,517 tonnes. Adding September’s ~ 1,700 tonnes, gives 8,217 tonnes for 9 months of 2022 so far. Which if annualised this nearly 11,000 tonnes, which is one-third of the world’s annual silver supply.”

Chuck again…  This is a long article with a lot of numbers, so if you have the time, click the link above, if not, I hope you enjoyed your snippet today! HA!

Market Prices 10/26/2022: American Style: A$ .6478, kiwi .5800, C$ .7389,  euro 1.0026, sterling 1.1577, Swiss $1.010, European Style: rand 18.0061, krone 10.3437, SEK 10.9114,  forint 405.97,  zloty 4.7472,  koruna 24.4541, RUB 61.66, yen 147.30, sing 1.4068, HKD 7.8497, INR 82.73, China 7.1740, peso 19.82, BRL 5.3162,  BBDXY 1,320.74,  Dollar Index 110.25, Oil $85.95, 10-year 4.06%, Silver $19.58, Platinum $948.00, Palladium $1,948.00, Copper $3.46, and Gold… $1,670.16

That’s it for today… The ECB meet tomorrow, and the FOMC next week… For tomorrow morning thru to next Wednesday, things should be pretty wild and wacky…Lot’s of opinions as to what comes next, etc. Well, I’m stepping outside of my normal day today, with a visit to a new restaurant that south of where I live, not far south, just south… I hear they have a fried garlic baloney sandwich… That alone, has be signed up for a visit!  Hopefully the rain has stopped, as I didn’t hear any during the wee hours of the night last night… That reminds me of a funny…  Old people know why they call it the “wee” hours of the night!  HAHAHAHA!  One of my all-time fave bands, Poco, take us to the finish line today with their song: You Better Think Twice…    What? You weren’t aware of my love for Poco? Well, they didn’t stay together very long, but the stuff they did do, I have liked for a long time now.   I hope you have a Wonderful Wednesday today, and Please Be Good To Yourself!

 

Chuck Butler