Author: admin

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

 

Rocktober 25, 2022

* Currencies & Metals get sold on Monday… 

* Where have the fundamentals gone? 

Good Day… And a Tom Terrific Tuesday to you! It’s raining outside this morning, and from what I heard last night on the weather report, it’s supposed to rain over 1 inch today. That’ll sure swell the streams, and creeks, like the one that runs behind my house. But, the weatherman told me last night that “we need the rain, as it has been quite dry here”… And he was right about that, as I keep getting fire an wind warnings on my phone… I used to sit outside at night, with a fire going in my chiminea… They were clay ones, and they kept cracking from the heat, so I bought a metal one, but, my sitting out with a fire has lost its appeal to me, as I was always sitting out there alone… ☹  Dire Straits greet me this morning with their song: Brothers In Arms… Mark Knopfler really shows his ability to pick his guitar in this song…

Well, Friday of last week, was the day in the sun, for the currencies and metals… They romped and rolled, and sent the dollar rumbling’, stumblin’, fumblin’ on the day, But that only lasted one day, and then it was back to buying dollars yesterday. The BBDXY gained 5 index points on the day. The euro actually gained a tiny amount on the day, while the Japanese yen got back to getting sold, after a day when the Bank of Japan (BOJ) tried its hand at solo intervention… It worked for one day, and the PFFT, the yen rally was over… Gold fought all day to get back to flat on the day yesterday, but fell short, after falling by $9 in the early trading on Monday, it ended the day down $8.20… There was a point in the day when it looked like Gold would get back to flat on the day, but that strong move was wiped out by the price manipulators, who were back in their places with bright shiny faces yesterday…

Gold ended the day at $1,650.70, and Silver was down 21-cents on the day, to end at $19.31… The price of Oil remains in the $84-$85 range, and bond saw the 10-year’s yield rise to 4.21%… The Treasury yield curve is still inverted folks… Just pointing that out…

The Good Folks at GATA sent me this note yesterday, here it is: ‘Bullion Star monetary metals analyst Ronan Manly writes today that silver inventories in the London Bullion Market Association system are at a record low, having fallen for 10 months straight, and that silver inventories at the New York Commodities Exchange are at a five-year low.”

Ok, if these were the “old days” of fundamentals ruling markets, you would take this information and run to the bullion dealer and back up the truck with Silver, right?  An asset that is short, is in need of a price adjustment… My father taught me that many years ago, and it has stuck with me all these years… And while we always have to be aware that price manipulators (the wolf) are always at the door, this shortage in Silver could be the straw that breaks the  wolf’s back… Physical demand could go viral and when / if that happens the price manipulators will be out of the markets, with no chance to step in and short the metal, due to the physical demand, and rising price of Silver…

In the overnight markets last night…  there was little movement in the dollar trading. The BBDXY is flat this morning at 1,340, and all the currencies look like they did yesterday at the close. Gold, however, is down $6 in the early trading today, and Silver has lost the $19 handle, as it is down 39-cents already today. I read a piece this morning that talked about how Gold is likely to remain in a tight range ahead of the FOMC meeting next week. Hmmm… The price of Oil has slipped to an $83 handle this morning, and bonds gave back their yield increases last night, and the 10-year trades with 4.17% yield this morning.

Speaking of the FOMC meeting next week… I guess there are still some traders out there that still believe the Fed Heads won’t hike rates aggressively next week… I’ll tell you now, so you will hear me later, that these same traders/ economists, will keep saying the Fed Heads are going to pivot, until they actually do pivot and then they’ll say, “see I told you so!”… 

It is my humble country boy opinion that the Fed Heads will hike rates 75 Basis Points next week, and then again at their meeting in 6 weeks before year end, which would bring their Fed Funds Rates to 4.75%… Still below the inflation rate of 8.25%… So, the interest rate isn’t going to make any headway in bringing inflation under control, but what it will do is smash the housing market bubble, the stock market bubble, and the , as Bill Bonner calls it, “the everything bubble”…   

Who knew that the Fed Heads would turn out to be the “pin in the room” that the everything bubble was trying to find…   But that’s what they will become by year end… Hey! It’s good to be known for “something”! right? All these increases in the Fed Funds Rate will continue to support the dollar, until it doesn’t… 

Speaking of dollar strength… I don’t know how to file this one, as this guy has not been on my hit parade before… I’m talking about Jim Cramer, and yesterday he said that “his charts suggest the U.S. dollar could be peaking”…  So, is that an omen to buy  dollars based on what his track record is, or is that an omen to sell dollars? What’s it gonna be boy? (Meat Loaf)…  

I mentioned above about how fundamentals ruled the markets in the old days… And last Friday, there was a piece of data that should have sent the dollar to the woodshed, for more than one day… but as we just talked about, the dollar rallied yesterday instead… The piece of data was Leading Indicators… 

Well, looky here… The U.S. Manufacturing PMI fell below the line in the sand of 50 this month at 49.9, falling from 51.8 the previous month. I had warned you yesterday that this data had seen some small decreases in the index number, and that it was ready to go below 50. OK, I hear some of you saying, what’s the big deal with 50?  Well, 50 is the line of demarcation between expansion and contraction. If the number falls below 50, the manufacturing sector is contracting, and that’s not a good sign for the U.S. economy…  There will be a short quiz at the end of the lesson today, so make sure you take good notes! HA!

The headline story on CNBC.com reads, “Markets plagued by increasing economic uncertainty and geopolitical risk in fourth quarter”…  Uncertainty… Longtime readers may recall me telling you many years ago, when these things mattered, that the markets do not like “unknowns”… And whenever there was an unknown in the markets, Gold would rally…  So, if CNBC thinks there are uncertainties in the markets, then Gold should be rallying and not looking back.

I know, I know, I sound like an old fogy on the rocking chair on the porch, whittling my stick to sharpen it, and talking about the “good ole days”…  And maybe my way of thinking about how markets should work, just doesn’t cut the mustard any longer, and never will again… If that’s so, then I’m hanging up my cleats, and taking my ball and bat and glove and going home! The mighty Casey has struck out…

The U.S. Data Cupboard today has the Case/ Shiller Home Price Index for August… I would think that what we’ve seen so far with housing that this index will reflect further price drops in houses… It is 2 months behind though, so what good is the data?  We’ll also see the stupid Consumer Confidence Index for this month… This index is so strange, to me that is, that I don’t know what to make of it any longer. Oh well, it is what it is.. .

To recap… The dollar gained ground yesterday and tried to wipe out the losses it had on Friday. It made good progress but didn’t quite erase its losses. The BBDXY gained 5 index points yesterday, pushing the currencies back down, and Gold lost $8 on the day.  There was little to no movement in the dollar overnight, so we start today, at the same place we ended yesterday, which is rare…  The FOMC meets next week, and Chuck gave his views on the next two meetings… 

For What It’s Worth… Since I was sound a lot like a broken record this morning, I thought I would add to it and get it over… this is an article that the good folks at GATA sent me  about how Chinas once vast supply of Copper is gone.. and it can be found here: China’s Billion-Dollar Cash-for-Copper Trade Grinds to a Halt (yahoo.com)

Or, here’s your snippet: “Traders from London to Lima would obsess over the flows in and out of Shanghai’s huge bonded copper stockpile. It was the focal point for a multi-billion-dollar cash-for-copper trade, whereby Chinese companies would use metal as collateral for cheap financing. A cottage industry of analysts sprang up to estimate the size of what became the world’s largest cache of copper metal.

But now China’s bonded warehouses are all but empty. The once-frenetic flow of metal into the stockpile has come to a juddering halt as two dominant financiers of Chinese metals, JPMorgan Chase & Co. and ICBC Standard Bank Plc, have halted new business there. Numerous traders and bankers interviewed by Bloomberg said they believe the trade is dead for now, and some predicted the bonded stocks could drop to zero, or close to it.

The implications are being felt across the market, as the world’s largest copper consumer becomes more reliant on imports to meet its near-term needs at a time when global stocks are already at historically low levels. The Chinese copper market is at its tightest in more than a decade as traders pay massive premiums for immediate supplies.

For now, the miners, traders and financiers arriving in London this weekend for the annual LME Week jamboree are largely cautious on the near-term prospects for copper, given concerns about the global economy. But many in the market say they are braced for price spikes when the macroeconomic news eventually improves. And without its buffer of bonded stocks, any pickup in Chinese demand could have an explosive effect on the market.”

Chuck again… yes, here it is… Copper, which has wallowed in the mud for a month of Sundays, sits at the precipice of a price spike… It will be interesting to see if this comes to fruition, eh?

Market Prices 10/25/2022: American Stye: A$ .6312,  kiwi .5684,  C$ .7282, euro .9859, sterling 1.1319, Swiss $ .9974, European Style: rand 18.4827, krone 10.5577, SEK 11.1322,  forint 418.00,  zloty 4.8479,  koruna 24.8184, RUB 61.78, yen 147.91, sing 1.4251, HKD 7.8499, INR 82.73, China 7.3087, peso 19.92, BRL 5.3036, BBDXY 1,340.89,  Dollar Index 120.02, Oil $83.26, 10-year 4.17%, Silver $18.90, Platinum $915.00, Palladium $1,965.00, Copper $3.40, and Gold… $1,644.18

That’s it for today… Well, I knew it when I wrote it yesterday, that I should have not said anything about the Blues 3 game winning streak to start the season, I knew that I had just jinxed them, and it proved to be true when the Blues lost 4-0 last night! Oh well, the Blues come home after a 3-game road trip to Canada, with 4 of the possible 6 points… Still a good start to the season! Well, next Monday is Halloween… I know I’ve told you this before, but I love to give out the candy to the trick-or-treaters, especially the little ones! It’s all changed these days, when I was a kid, me and my sisters would be invited into the home, and we had to sing a song for the host house to get a treat… Oh, well, as long as it’s not a rainy night, I’ll have fun sitting out with a fire going, and handing out treats! The Doobie Brothers take us to the finish line today with their song: Long Train Running… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

 

Rocktober 24, 2022

* Currencies & metals rally on Friday

* But get sold again in the overnight markets, last night. 

Good Day… And a Marvelous Monday to you! Well, the Phillies made it to the World Series in 5 games VS the Padres, and the Astros only needed 4 games to send the Yankees home. So, it’s a World Series of two old National League foes, the Phillies and Astros… should be good !I had a wonderful time on Saturday, first off I got to spend the day with my oldest son (Amdrew), 2^nd, we went to the Mizzou Homecoming game, and Mizzou won, and finally, we tailgated with Brian, who made us pizzas! We made it home safely on Saturday night, and I went downstairs, burned out, sat in my recliner and fell asleep! Sunday was a fun day too, as good friend, Duane, came back to town, and we sat outside watching the Chiefs win… I love the pageantry of college football, the band, the cheerleaders, the student body section, and the way the fans are true to their school, whether they be a teenager, or an old person like me.. I love it! It was a Gold Rush day at the stadium, and Andrew and I had on our Gold Mizzou shirts, along with the 55,000 of a total of 60,000 fans that did the same… (somehow 5,000 folks didn’t get the memo to wear Gold! ) Neil Young greets me this morning with his song: Till The Morning Comes…

Well, it was not a good day for the dollar on Friday, on what has become a rare day, the dollar got sold, and I mean got sold… The BBDXY lost over 11 index points, Gold gained $29, and the currencies smiled for the first time in a month of Sundays. I searched and searched yesterday for an article that talked about why the dollar got sold like it did, but there was nothing out there, It was as if the day never happened… So, then I put on my “got to figure this out” hat… And what I came up with was that the dollar had been so overbought for so long, that it was bound to have a day like that… There are rumors of a Treasury Bond problem out there, and there was the news that the U.S. sent Switzerland over $11 Billion in dollars for their use… Wait, What? Did we vote to send $11 Billion to Switzerland? I have nothing against the Swiss, other than they have a sketchy Central Bank history… But as long as we’re going into debt, as a country, we might as well be spending the money at home, eh?

So… like I said, Gold gained $29.80 on Friday to close the week at $1,658.90, and Silver gained 78-cents, to close the week at $19.52… Now, I had to wonder where the boys in the band were on Friday, had they already closed up shop and headed for the Hamptons? Or is this part of their “trap”?  Short the heck out of Gold & Silver, causing the price to drop like rock, closing out their shorts with a profit, then turn around and buy Gold & Silver Futures, causing the price to gain, until it gets to look like it should look, and then start the shorting all over again, thus booking sales on their buys…   And this is why I always say, don’t get caught up in the “trap”… Buy it and forget it…  Got Gold?

The euro climbed to the mid 98-cent level on Friday, and get this… The Japanese yen rallied on Friday! It’s being thought that the Bank of Japan (BOJ) was in selling dollars buying yen, and that cause a some yen traders to join in and the yen had its biggest one day move VS the dollar in quite some time! I guess the BOJ got tired of waiting for everyone else in the world to join in them in selling dollars, and decided to go it alone… Of course if the BOJ had rounded up the boys, and got them all to intervene at the same time, sort of like a Plaza Accord, then we would have something to talk about, without that sort of Accord, the yen is bound to return to being the whipping boy of the dollar…

The price of Oil was steady Eddie on Friday and ended the week at $85… I read a report this past week that the U.S. “The US has just 25 days of diesel supply, the lowest since 2008, according to the Energy Information Administration. At the same time, the four-week rolling average of distillates supplied, a proxy for demand, rose to its highest seasonal level since 2007.” – Bloomberg.com

Now that’s scary isn’t it? Bill Bonner tells us about the problems here: “In America, too, rising energy prices have yet to cause a crisis. But diesel fuel is already running low. 

Energy is food; Food is energy

When you eat, you are eating energy. The sun’s energy produces fruits, grains and vegetables. These are fed to animals to produce meat.

But even before a single sprout appears in a field, energy has already contributed to the production. Soil has been tilled, usually by giant diesel-fed tractors… it has been raked… it has often also been treated with herbicide, insecticide, and fertilizer, made, delivered, and applied using oil and gas.” – Bill Bonner @ 
https://bonnerprivateresearch.substack.com

In the overnight markets last night… The dollar selling ended… Hmmm…  Well, at least that pretty much makes my thought about the dollar merely being very overbought, and that brought about some selling to take profits, look pretty good, eh? The BBDXY has gained 7 index points overnight, and Gold is down $9 to start the day. The price of Oil has slipped a buck to trade with a $84 handle this morning, and bonds are steady Eddie…

Every day I call up the price of Copper, thinking that today is going to be the day, it’s price finally relates to the shortage/ tightness of the physical market. But it wasn’t today, UGH!  I did find this on Bloomberg.com, though, “Copper prices don’t reflect a “strikingly tight” physical market, according to the world’s largest publicly-traded producer of the metal used in everything from computer chips to electric vehicles.

Macroeconomic headwinds have pushed copper futures down almost 30% from a peak in March, despite brisk demand and shrinking inventories that are nearing historical lows.

It’s “striking how negative financial markets feel about this market and yet the physical market is so tight,” said Richard Adkerson, chief executive officer of Freeport-McMoRan Inc.

“We’re not seeing customers scaling back orders. Customers are really fighting to get products,” Adkerson said Thursday during a conference call with analyst s after the miner reported adjusted third-quarter per-share profit that exceeded estimates.”

Chuck again… So, Copper, like Silver is seeing its price being kept down, even with an extreme shortage in these two physical markets. How long can this situation remain viable? How long can the forces that be, control the price of these metals? Only the Shadow Knows….

Everything is pointing to a deep recession folks… The neon red arrow is pointing that way, and so is the Leading Indicators report that printed last Friday, and Showed us that The economy sent a low-key signal Thursday that a recession is looming.

According to the Conference Board’s Leading Economic Indicators index, conditions worsened in September, with the gauge down 0.4% from the month before and off 2.8% for the six-month period.

“The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before year end,” said Ataman Ozyildirim, senior director of economics at the Conference Board.

Ozyildrim noted that the weakness in the index was “widespread” as high inflation, a decelerating jobs picture and tighter credit conditions are pressuring the economy.”

Chuck again… I’ve explained in the past that Capacity Utilization and the Leading Indicators are the only two forward looking pieces of data that we see printed each month. The Leading Indicator data is usually overlooked, until that is, until it goes negative for 3 consecutive months…

The U.S. Data Cupboard this week is spotty, as it will have some real economic data, like the first look at 3^rd QTR GDP, and so on, on some days, and on others it will be lacking…  We start the final week of Rocktober, with The U.S. Manufacturing PMI… this data has been slipping by small amounts in recent prints, and I would expect this print to be lower than last months 51.8 figure.

To recap… The dollar got sold like funnel cakes at a State Fair on Friday, last week, and an overly overbought dollar is the only thing that Chuck can point to as to the reason we say the first day of dollar selling like that in a month of Sundays. Gold gained $29 on Friday, and Silver gain $78-cents, so it was a bad day for the dollar… America has only 25 days of Diesel supply left in reserves… Chuck is very concerned about that going forward. And the Leading Indicators are telling us to batten down the hatches… at least that’s my version of what they are telling us!

For What It’s Worth… Since I mentioned this earlier this morning, I thought it best to highlight it in the FWIW section this morning. This article is about the Fed sending $11 Billion to Switzerland, and it can be found here: Fed Quietly Sends Record $11 Billion To Switzerland As Dollar Funding Shockwave Crushes Central Banks (nationandstate.com)

Or, here’s your snippet: “Stocks are surging today amid a dovish one-two punch from Fed whisperer Nick Timiraos who hinted that the time is coming to reassess the pace of rate hikes, followed a few hours later by the otherwise hawkish Mary Daly who also suggested that the Fed may be moving too fast while bringing up the sensitive topic of broken markets, and the reason for this particular dovish reversal and jawboning is becoming increasingly clear: the same reason we have been warning for the past year that the Fed’s tightening campaign, now in its terminal stages, will inevitably break something which will manifest itself first in a worldwide dollar shortage and short-squeeze crisis, as global USD funding markets grind to a halt.

Of course, this is good news, because as BofA Chief Investment Strategist Michael Hartnett (whose latest weekly note we will dissect shortly) is fond of saying “Markets stop panicking when central banks start panicking.”

So in what may be the best news to shell-shocked bulls after the worst September and worst Q3 in generations, in a harrowing year for markets, central banks are starting to panic more with every passing day. First it was the BoJ with its September intervention, then the BoE with its bailout of pensions, then the BoJ again with its second consecutive injection of billions of U.S. dollars into the market – consider the paradox: there is such a massive USD short squeeze out there that it was the Bank of Japan that was compelled to inject approximately $40 billion in USD today (in only its second intervention this century) to prop up the yen since the Fed won’t lift a finger…and now, for the third week in a row, it’s Switzerland’s turn.

Recall that one month ago, after the (first) panicked pivot by the BoE, when global markets were in free fall, we said that markets desperately needed some words of encouragement from the Fed, or failing that – and with the dollar soaring to new all time highs every day – the Fed had to make some preemptive announcement on USD FX swap lines, if only to reassure global markets that amid this historic, U.S. dollar short squeeze, at least someone can and will print as many as are needed to avoid systemic collapse.”

Chuck again… how, after all the currency printing in the past 5 years, is there a dollar shortage?  Oh, that’s right, it all went to the Casino Banks! And stimmy checks! 

Market Prices 10/24, 2022: American Style: A$.6298, kiwi .5687, C$ .7292, euro .9826, sterling 1.1327, Swiss .9983, European Style: rand 18.3280, krone 10.5726, SEK 11.2666, forint 419.63, zloty 4.8716, koruna 24.9028, RUB 61.35, yen 149.35, sing 1.4233, HKD 7.8497, INR 82.65, China 7.2627, peso 19.98, BRL 5.1635, BBDXY 1,342.34, Dollar Index 112.25, Oil $84.18, 10-year 4.17%, Silver $19.23, Platinum 936.00, Palladium $2,014.00, Copper $3.43, and Gold… $1,648.89

That’s it for today…  Don’t know what came over me, but I had a very difficult time sleeping last night, finally at 5 am I got up and began to write… I tried 3 different sleeping arrangements, and none of them held the promise of sound sleep for more than 2 hours… Oh, poor, poor pitiful me! (Linda Ronstadt) The cold weather that crept up on us earlier last week, gave way to normal temps for this time of year, and that made me very happy, given my distaste for cold weather! Our Blues are starting the season on the right skate, and have won their first 3 games, and get back on the ice tonight against Winnipeg… Let’s Go Blues! If my beloved Mizzou Tigers would stop shooting themselves in the foot, they might win a game where the defense doesn’t have to make a stand to win the game… UGH!  But a W is a W, right? Last week I told you that it had been 2 years since I gave up sweets, but I had forgotten that I cheated while in Florida, last week, and had pineapple cobbler… Just thought I would come clean on that one! The full 10+ minute  live version of Loggins & Messina’s song: Angry Eyes, takes us to the finish line today… I hope you have a Marvelous Monday to day, and please remember to Be Good To Yourself!

Chuck Butler

Rocktober 20, 2022

* currencies & metals get bought in the overnight markets last night

* Chuck tells overnight traders to “pick a lane”… 

Good Day… And a Tub Thumpin’ Thursday to one and all! I was watching the Padres/ Phillies game yesterday, and for the first few innings it appeared that the Phillies would leave San Diego with a 2-0 lead in the series… I thought to myself…  Remember a month ago at the local watering hole, when I was asked which team I wanted to see the Cardinals play in the playoffs, and I responded, “I really don’t care as long as it’s not the Phillies, they scare me”… Now you would think that someone that convicted toward a team would go place a bet on them, right? Well, not me, I’m too thick headed to gamble, or even know how to do it! Any way, the Padres rallied and evened the series 1-1… The great Leon Russell greets me this morning with his song: Back To The Island…  I really like this song, BTW…

Well, the overnight buying into Wednesday morning was, as I reported yesterday, all dollar centered, with some heavy dollar buying going on. And I was holding my breath as to what would take place once the U.S. traders saw the overnight results, thinking that it would be an absolute ugly day… Well…there was good news and bad news yesterday… First the good news… During the U.S. Session yesterday, the dollar drifted, and actually lost 1 index point of the 7 it had gained overnight… Gold which was down $20 in the early trading didn’t lose any more major ground… The bad news is that Gold ended the day down $22.50 to close at $1,630.90, and Silver which was down 41-cents early ended the day down 28-cents to close at $18.56…  So, it was still an ugly day, just not as ugly as I feared it would be given the dollar buying overnight…

The price of Oil rallied and ended the day trading with a $85 handle, while the 10-year Treasury yield gained more ground yesterday, and ended the day with a 4.14% Yield… So… do you think the bond boys are finally giving up the ghost on their Fed Head Pivot call?  It sure appears that way to me… But recall a month or so ago, when the 10-year’s yield was 4.% the bond saw a HUGE amount of buying to bring the yield down to 3.79%, and it’s been a struggle ever since to regain that 4% yield… 

In The overnight markets last night… The dollar got sold… Not by a whole lot, but the BDDXY has lost 3 index points overnight and trades this morning at 1,344… Gold is up $6 in the early trading today, and Silver has added 16-cents… The price of Oil has bumped higher to trade with a $87 handle this morning, while bonds were steady overnight.  These overnight traders need to stick to their lane… I mean it’s either buy dollars or sell dollars, but not flip flop like a fish out of water on the shore…  Sure, facts change, but not like the side of the trade these guys are choosing each night… Oh, well, what else can be changed to the react opposite of what has been the normal reaction? We see it all the time in the Data Cupboard, bad data gets a positive response in the markets, and vice-versa…  This stuff drives a fundamentalist like me, stark driving mad!

Things have been pretty quiet down under these days… Ever since the Reserve Bank of Australia hiked rates 25 Basis Point to bring their Official Cash Rate to 2.60%, and that followed the Reserve Bank of New Zealand (RBNZ) and their rate hike which was larger and brought their OCR to 3.5%… Both banks gave hints at their respective meetings that more rate hikes would be in store…  But I look at New Zealand, and their rate structure, and wonder why kiwi is struggling these days… It’s not just about interest rates, or at least it shouldn’t be, but.. .That’s what it’s all about in the U.S.  The U.S. can be officially in a recession, while hiking rates, which has never been tried before, and have debt up to their eyeballs, but the dollar is strong, because of the higher interest rate than its major competitors for deposits, Japan, China, Eurozone, and U.K…. But not higher than kiwi… So, go figure that one…

The European Central Bank (ECB) will meet next week (10/27) and I fully expect them to hike rates once again, as I’ve heard nothing but comments from the ECB members about how they will do everything they need to do to bring inflation back to their target of 2% I would have to say that the ECB suffers from what I used to suffer when I was at EverBank… No marketing!  They should have the Presient (La Garde) and anyone else in charge out talking up interest rates to support the euro… I’m just saying…

I talked a bit about the Swiss franc yesterday, and then this article about the Swiss National Bank (SNB) came across my desk from the good folks at GATA… Seems the SNB is looking for dollars, and not just the normal dollar swap stuff they get from the Fed Heads… The article talks about how the SNB is simply looking to make a profit on the dollar trade… Now that seems to be something that a Central Bank should not be taking part of, right?

Well, have you heard the news that the railroad strike is back on? The tentative agreement was rejected by the union members, here’s CNN with a snippet on this:” A union of railroad track maintenance workers has rejected a tentative agreement with the nation’s freight carriers, renewing the threat that there could be a strike that shuts down this vital link in the nation’s already struggling supply chain.”

Uh-Oh! And just in time for the Christmas shopping season! Oh, and that other little thing called the mid-erm elections…  This doesn’t bode well for the economy folks…

The folks at www.wallstreetonparade.com, Russ and Pam Martens were at it again last week, when they reported a very ironic story regarding Credit Suisse…  Let’s listen in on a snippet: “On September 28, Risk.net named Credit Suisse the “Credit Derivatives House of the Year.” Three businesses days later, Credit Suisse saw its own Credit Default Swaps blow out to more than 300 basis points and some of its own bonds trade at 63 cents on the dollar. Simultaneously, its shares traded at an intraday low of $3.70 in New York on October 3, closing at $4.01, and putting it in crisis management mode.

On the same day that its stock, bonds and Credit Default Swaps were exhibiting severe stress, Reuters decided to run an article in the early afternoon reminiscing on the serial scandals that have plagued the global bank: words like “cocaine,” “kickbacks,” “fraud,” and “spying,” reminded investment managers of just how voluminous and varied Credit Suisse’s scandals had been of late.”

Chuck again…now that would be funny if it weren’t so serious…I’m still laughing out loud at this development… Hey! Maybe the same folks that thought it wise to give Ben Bernanke a Nobel Prize for boneheaded economics, were the folks that named Credit Suisse “Credit Derivatives House of the Year” , yeah, that’s it that’s the ticket!

I couldn’t make that stuff up if I wanted to!  We used to have a thing on the trading desk, when Chris Gaffney would come in with the Riverfront Times, and read us the article titled: News of the Weird…  Good memories there…

OK… I had a dear reader send me a note yesterday, offering his thought on why the major currencies (sans yen) are trading around $1.00…  He thinks that it’s a way for the Gov’ts to covert their currencies to digital currencies easily…   I told him I thought he was onto something there, as my Spider Sense was tingling… Just a thought…

Deep thoughts by Jack Handy… Or, Chuck Butler in his place… You don’t suppose that the dark side is making plans to have one Global economy, one Global currency, and on Global leadership do you? Now that’s a conspiracy thought that is out there!   Just thought I would share with you some things that I think about from time to time…

The U.S. Data Cupboard today, has the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims. Along with that print, we’ll also see the leading Indicators, which for the last two months have been negative… And then finally, another regional PMI, this time from the Philly region… I wonder if it will show the same rot on the vine that the Empire region showed last week?

To recap… The dollar got bought by the bushelful in the overnight markets to Wednesday morning, where the U.S. traders picked it up, and failed to generate an follow-up… The dollar still had a strong showing for the day, and Gold ended up losing $22.50 on the day… Chuck talks about the A$ and kiwi this morning, and the ECB, and a lot of other stuff!

For What It’s Worth… here we go again with derivatives being compared to weapons of mass destruction, and Warren Buffett called them… These are bad things for any market/ economy, especially when things go opposite of how the derivative says they will go… This article is from WSOP, and it can be found here: www.wallstreetonparade.com

Or, here’s your snippet:” Today, we will be asking the Senate Banking Committee, its Chair, Senator Sherrod Brown, and one of its most knowledgeable members, Senator Elizabeth Warren, to call an emergency hearing and subpoena the testimony of two brilliant researchers for the Office of Financial Research. Those researchers are Andrew Ellul and Dasol Kim.

The men have done nothing wrong. In fact, they have done something courageous. They have effectively blown the whistle on how global Wall Street banks have, once again, endangered the stability of the U.S. financial system through their opaque and dangerous use of over-the-counter derivatives.

Unfortunately, because of the legions of lobbyists employed by Wall Street that shape and corrupt the rules of federal bank regulators, these men are prevented from revealing the names of the most dangerous banks and their most dangerous counterparties because that information is considered restricted information obtained through supervisory inspections. (We have not spoken to these researchers directly. We make the assumption that they have not released the names of the banks and their most dangerous counterparties because it is considered “supervisory” information since that is the same excuse that we have received repeatedly when we file Freedom of Information Act requests with federal banking regulators.)

We believe that the Senate Banking Committee can, and should, compel their testimony and the naming of names under subpoena because the secrets they are being forced to keep present a clear and present danger to the financial stability of the United States and thus a clear and present danger to the national security of the United States.

Andrew Ellul is Professor of Finance and Fred T. Greene Chair in Finance at Indiana University’s Kelley School of Business. He holds a Ph.D. from the London School of Economics and Political Science.”

Chuck again… I thank Ed Steer at www.edsteergoldsilver.com for highlighting this article this morning, and I’ve said it before, if it’s got the Ed Steer stamp of approval, then it’s good enough for me!

Markets pricing 10/20/2022: American Style: A$ .6309, kiwi .5704, C$ .7287, euro .9812, sterling 1.1233, rand 18.2469, krone 10.5859, SEK 11.1878, forint 419.40, zloty 4.1940, koruna 25.0013, RUB 61.44,

JPY 149.48, sing 1.4228, HKD 7.8490, INR 82.75, China 7.2222, peso 20.07, BRL 5.2716, BBDXY 1,344.37, Dollar Index 112.52, Oil $87.50, 10-year 4.14%, Silver $18.72, Platinum $894.00, Palladium $2,017.00, Copper $3.42, and Gold… $1,636.33

That’s it for today and this week… The week went fast for me, and I’m sitting here trying to wonder why especially since I haven’t left the house so far this week, due to the cold weather… Good news, the weather is supposed to warm up this weekend, so I’m all over that! You know, whenever I see someone and they say, “it’s good to see you”, I respond “it’s good to be seen”!  And they always give me a second look and then chuckle…  But I mean it! I could be 6 feet in the ground, and wouldn’t be seen any longer! We are already stocked with Halloween Candy! Usually, we buy it early, and then have to go back out and buy more to give out to the Trick or Treaters… But not any longer, not since I gave up sweets… It’s been two years now, two years of checking my blood counts, two years of passing up cakes, cookies, muffins, and all the other things I used to eat for breakfast with coffee each day!  I’m not complaining… It’s just that I never thought this would go on this long… But it has… Grover Washington, Jr. takes us to the finish line today with his jazzy song: Just The Two Of Us, “building castles in the sky, just the two us, you and I” Yeah, that song… I hope you have a Tub Thumpin’ Thursday today, a Fantastico Friday tomorrow, and will remember to Be Good To Yourself!

Chuck Butler

 

Rocktober 19, 2022

* Currencies & metals get sold in the overnight markets

* 15 Million barrels of Oil to be released from our reserve…

Good Day… And a Wonderful Wednesday to you! The air outside yesterday was so cold, that I gave up trying to eat my lunch outside, as I usually do, and then read for some time, while being outside, enjoying the sunshine and scenery… Oh, well, this happens every year, we turn the warm days over to cold days… I was surprised I didn’t tick somebody off with my rant yesterday, and trip down the rabbit hole… I guess, all my dear readers have grown accustomed to me and my rants… Maybe?  I’m never looking for 100% agreement with what I have to say, just civil responses is all I ask for..  Congrats to the Yankees who moved on to play the Astros in the ALCS… Robert Plant greets me this morning with his solo effort: In the Mood…

Well, when I left you yesterday morning, I was upbeat about the prospects for a good day in the currencies and metals, but those prospects were thrown out with the bathwater, as the dollar got bought throughout the day… So, when the dust settled on the trading day it showed that the BBDXY had lost just 1 index point on the day, and Gold had only gained $2.90 to close the day at $1,653.40, and Silver, which had started the day up 5-cents was only allowed to gain 18-cents on the day and close at $18.83… I’m not going to go all postal on the price manipulators today for yesterday’s limiting of the metals’ gains. You, me, and the guy down the street, know they exist, and there’s nothing we can do about it, because the Gov’t is behind it all…I’m just saying…

The price of Oil lost a buck yesterday and ended the day with a $84 handle… , and the 10-year added 2 bips onto its yield to end the day at 4.02%,,,  I mentioned yesterday the rumor going around that Saudi Arabia is going to join the BRICS… And there was nothing yesterday out there to dispel that rumor, so far it’s a go on that thought…

Speaking of Oil… Mom! He’s doing it again! The POTUS announced yesterday that he will release 15 Million barrels of Oil from the U.S. Oil reserve… This is the third time he’s done this, and each time he says that he believes that this will give citizens a break at the gas pump…   Ok, the previous times didn’t move the needle, and I doubt this time will move it either…  You know what they say about doing something over and over again thinking that you’ll get a different outcome proves?  Insanity… Not that I’m calling the POTUS insane, I’m just pointing what the old saying says…

In the overnight markets last night…Well the streak of 2 nights with dollar selling came to abrupt end last night with the dollar getting bought like there’s no tomorrow! The BBDXY has gained 7 index points overnight, and Gold is down $20 to start the day… There’s no rhyme or reason for this sudden surge in the dollar, folks… The price of Oil has slipped again and trades this morning with a $83 handle, and the 10-year Treasury’s yield bumped higher again and trades this morning with 4.08% yield…

Well, a couple of weeks ago, the pound sterling was on the cliff, looking over it and saw its future was going to much like Wiley Coyote’s when he realizes there is no ground underneath him…  And now two weeks later the pound is back to gaining VS the dollar…   Here’s Bloomberg.com with an explanation on this: “One-year risk reversals in cable, a barometer of market positioning and sentiment, rallied on Monday in favor of calls by the most since June 2016, implying bearish sentiment haunting the currency retreated almost as fast as the government’s decision to scrap plans for vast unfunded fiscal stimulus.”

So, the rally in the pound has been mostly short covering… Hmmm… That’s not the stuff that rallies are made of, but given where the pound was two weeks ago, I’m sure the Bank of England is happy as a lark!

Well I can’t wait for the Nov 1, 2 FOMC meeting, when all those traders out there still holding out hope for a Fed Head Pivot, get their hats handed to them once and for all! A few months ago, I too thought the Fed Heads didn’t have the guts to carry out the dirty deed, but they proved me wrong, and ever since then I can’t believe that there are still those traders out there that still are holding out hope for a PIVOT…

The Swiss franc has been going back and forth around the $1.00 figure, and today it’s below the figure. I told you the other day that I hadn’t remembered seeing the franc this weak before… I mean when it was first cut loose to trade on the open market, the franc was only around 25-cents… But I was in high school in 1971, and didn’t even know that Swiss franc existed!  The Bank of Switzerland (BOS) took their internal rate out of negative territory in their last meeting, and that that should have carried some weight for the franc, but realistically, the franc is still a very low yielding currency…

But being a low yielding currency hasn’t hurt the franc before all this negative rates and stuff that’s been going on these last few years.  I’m sure you already did the math on this, but since the franc was cut loose, it has gained 75-cents… the chart for francs/ dollars looks like a long downward slope… So, don’t get discouraged here with the franc, that’s all I’m trying to impart to you…

All righty then, what comes next? I’m reading quite a few articles that are talking about how they believe that Gold is ready to explode higher in price… And there premise is that the whole shootin’ match here in the U.S. is circling the bowl right now, and when it’s all said and done, each individual’s wealth will be counted in ounces, not dollars, euros, or yen… Now that’s a strong statement, and one that caught my eye for sure!

Remember what I’ve said and told you before, and that is that all this debt around the world is going to come home to roost, and someone, somewhere is going to be the first to default on their debt, then seeing that it didn’t bring the world to a stop, another country will default, and so on, and when it comes to the U.S., it’s when the Gov’t will announce that dollars are no longer your medium of trade and exchange, and from now on it’s the use of digital dollars…

Well, when that happens, I think the statement of counting your wealth in ounces, will become reality… I’m just saying…

The Congressional Budget Office announced late last week that the U.S. booked a $2.77 Trillion deficit in 2021… And $1.4 Trillion in 2022… These Budge Deficits, when unpaid, become part of the national debt, which is currently $31 Trillion..  Our GDP is around 23 Trillion…  That’s not a good thing, and hasn’t been for some time… A Dear reader sent me a copy of a Pfennig that I wrote in 2008, and I was harping about the Federal Budget then when it was $10 Trillion!  I said then that the trend in building this debt was not going to be sustainable… Well, I was wrong about that, we, as a country have slugged on building more than $20 Trillion more in the last 14 years… Sure our GDP stinks, and has for over 10 years now, and that is because it takes more and more tax revenues to for deficit spending, and that takes away from spending in other areas of the economy that need help…

I don’t like to use scare tactics in my writing… But all this debt should scare you somewhat, and what or how will the Gov’t choose to deal with it when push comes to shove… That’s the $64 question… All I know is to ask: Got Gold?

Of course when I say “Got Gold”, I’m using Gold as the poster for all precious metals, including Silver, and Copper, and Platinum and Palladium…

The Fed Heads interest rate hikes have begun to have negative effects on the Housing Market… There was a report yesterday that Home sellers are slashing their asking prices at a record clip as surging mortgage rates drive a downturn in the U.S. housing market, according to a recent report from real estate firm Redfin.

Well, it had to be done.. trees don’t grow to the moon, and home prices shouldn’t either! Ultra-low mortgage rates and easy credit fueled the home price surge, and now those props have been removed…

The U.S. Data Cupboard yesterday saw Industrial Production for Sept rise .4%, which was quite surprising, given the rot on the manufacturing in the country, but there’s been quite a bit of fishy data reports lately, along with pushing down the price of Oil, and metals… Ed Steer said something this morning that I agree with wholeheartedly… here’s Ed, “Gold and silver are still being forced to languish below any moving average that matters…as is palladium. Why platinum is allowed to be an outlier is a mystery me, as it’s still sitting in no-man’s land between its 50 and 200-day moving averages.

Copper was closed down another nickel yesterday at $3.36/pound — and also far below any moving average that matters.

Natural gas [chart included] took another big hit yesterday, down 25 cents/4.23%…closing at $5.74/1,000 cubic feet – and now miles below any moving average that matters. Ditto for WTIC, as it was closed lower by $2.46 — and finished the day at $82.07/barrel — and also below below any moving average that matters.

With the U.S. mid-terms now less than three weeks away — and as I mentioned yesterday, I’m getting a whiff of price interference for political purposes.” -Ed Steer at www.edsteergoldsilver.com

To recap… The dollar didn’t move much yesterday, but in the overnight markets it got bought like there’s no tomorrow. Gold is getting sols this morning once again… The POTUS is releasing 15 Million barrels of Oil, his third such release… The Swiss franc has seen better days, but it has also seen worst days, and Chuck tells readers to not be discouraged by the franc’s current prices…

For What It’s Worth… Since I spend so much time on debt and interest rates this morning, it only made sense to pull this out of the Bill Bonner archives…  Bill’s take on all this can be found at his website: Bonner Private Research | Substack

Or, here’s your snippet: “”As interest rates rise, fewer people borrow, and more existing credits are cancelled or go bad. Our monetary system is based on credit; a decline in the amount of credit outstanding is the same as a contraction in the money supply….

….so, a decline in the bond market tells us that the tide of credit, on which the whole economy – real and fake – floats, is going out.

Already, the Dow boats are down 15%. The 10-year Treasury bond yield has more than quadrupled from its 2020 low. And mortgage rates have doubled.

But these are, so far, just mild corrections. If this is the Primary Trend we think it is, it may take us all the way down to where the last one began – in 1980. If so….

The Dow will keep dropping…down below 20,000.

Bonds will be crushed. Low coupon bonds will be regarded as ‘certificates of guaranteed confiscation’ as they were in the ’70s.

Mortgage rates will shoot up to more than 18%.

And the US – economically and politically – will turn into a quivering jelly of confusion and despair.

A Bonner dictum: the force of a correction is equal and opposite to the claptrap that preceded it. By that alone, the developing Primary Trend should be one for the record books.”

Chuck again… Ahhh, yes, I can always depend on Bill to set things right in my mind!

Market Prices 10/19/2022: American Style: A$ .6318, kiwi .5698, C$ .7260, euro .9781, sterling 1.1255, Swiss $.9961, European Style: rand 18.1904, krone 10.6275, SEK 11.1936, forint 422.76, zloty 4.9013, koruna 25.0984, RUB 61.69, yen 149.64, sing 1.4239, HKD 7.8500, INR 83.02, China 7.2259, peso 20.07, BRL 5.2413, BBDXY 1,346.29, Dollar Index 112.68, Oil $83.95, 10-year 4.08%, Silver $18.32, Platinum $891.00, Palladium $1,976.00, Copper $3.40, and Gold… $1,632.45

That’s it for today… I have no idea where the time went this morning, I got up at my usual time, and now that I’m getting ready to end the letter, it’s late! UGH!  Oh well, that just means I have to wait extra time before I have my first cup of coffee this morning!  Hey! Did I tell you that I get to go to the Mizzou homecoming game this Saturday? Oh, of course I did! I’m just so excited about going to the game, that I can’t get it out of my mind! Like a kid at Christmas! I have some major plans for the new year, so all that can wait… Journey takes us to the finish line today with their song: Only the Young.. I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!

Chuck Butler