Author: admin

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

Rocktober 18, 2022

* currencies & metals gain a bit on Monday

* the dollar gets sold in the overnight markets two nights in a row… 

Good Day… And a Tom Terrific Tuesday to you! Brrrr… it was cold here yesterday, and I braved it going out to my car with just short sleeves on… YIKES! It’s too darn early to be pulling the winter coat out of the closet… Congrats to the      for winning their playoff series and moving onto play the Astros… I had a wonderful lunch yesterday with Dennis and Dean Miller, and Frank Trotter… We talked business, we talked about all sorts of things, and it was very much like the times that Frank & I used to spend together in the past… Our meeting yesterday, got me thinking, and much of today’s letter will reflect my thoughts on the future… But before then, Chicago greets me this morning with their song: Movin’ In…

Well, the dollar was sliding yesterday, and looked to be in trouble on the day, as the BBDXY was down 4 index points, Gold was up $15, and the world looked to be attempting to right things… But then the white knight showed up and bought dollars to bring the BBDXY back to flat on the day, and Gold only able to book at $4 gain… That white knight, had to be the Plunge Protection Team (PPT).  The euro climbed above 99-cents yesterday while sterling gained on the day to end the day with a 1.13 handle.  While the Japanese yen fell another point to trade at 149.00. The Swiss franc popped its head back above 1.00, but barely…

The Price of Oil traded Steady Eddie yesterday, and remained with a $85 handle to close the day. And the 10-year Treasury popped back above the 4.00% yield and ended the day there.

I say that the white knight came and saved the dollar yesterday, based on what I had read during the day about how Chinese banks are selling dollars and buying renminbi. Yes in reality it’s not that simple of a trade, but when you get down to the nit and gritty, it’s selling dollars and buying renminbi.  The Chinese see this a killing two birds with one stone… They get to get rid of dollars, and prop up their currency, which had been quite week in recent times.

In the overnight markets last night…  The dollar got sold, marking two consecutive overnight sessions where traders sold dollars… As I said yesterday morning, “it’ll be interesting to see if there’s any follow up in the U.S. markets”… The BBDXY lost 4 index points last night, and trades this morning at 1,3336… Gold is up $8 in the early trading today, and Silver is up 50-cents, so it appears that today will be a good day for the metals and currencies, but then we’ll have to keep an eye out for the White Knight, eh?

The price of Oil remains steady at $85, and the 10-year Treasury is keeping the 4% yield for now.. .In recent days, that 4% yield has been fleeting, and not steady… At a 4% 10-year yield, mortgage rates will be as high as 6%…  I know that to some young folks, that sounds outrageous, but it’s more than ½ of what I paid in mortgage interest when I first bought a house in the 80’s! But then I wasn’t looking to buy a McMansion, just a little ranch in a river town…

Want to hear something really scary? There are talks going around that Saudi Arabia is in talks to join the BRICS nations that consists of countries that are known to be diversifying out of their dollar positions… Saudi Arabia has been playing with fire regarding selling their Oil for a currency other than dollars, and now this?  I’m envisioning another Oil embargo that would bring the U.S. economy to its knees, long before the Fed Heads can with their rate hikes…

 

OK… here we go down a deep dark rabbit hole, folks… If you don’t want to come along, then please, just skip ahead to the data cupboard recap..  Ready? OK… the stupid CPI report last Thursday, got me thinking over the weekend, and then again yesterday, about how, instead of inflation backing off, it’s remaining strong… Even with the 8 Fed Head interest rate hikes that have been booked so far..  So, when you look at this logically, you come to a realization that the Fed Heads have a lot of work to do… Even if they hike rates 75 Basis Points at their next two meetings, they’ll still be far behind the inflation 8 ball…  And we haven’t begun to feel the real pain of having higher interest rates…

 

Add to that, and you’ve got our ever expanding debt, which is now over $31 Trillion. And then the piece de resistance, the NGD… The New Green Deal, which will not only add to our debt, but will also put trillions of dollars out there to be spent, and thus creating more inflation…  I don’t know about what you are thinking about reducing our dependence on fossil fuels… But how will you feel about having to walk everywhere in the future? We are a country of movers… We like to move from place to place, and we like to get there by car… now, don’t even get me started on electric cars… where do they get the power for electric cars? From the batteries, where do the batteries come from? Gotcha!  We built our country to be a strong dependent country on the ability to extract Oil, and put it toward our industrial society…

 

I just don’t see how going to electric cars solve anything… Besides, why are we doing that? Because, supposedly that there is climate change… Well, hell yes, there’s climate change, there have been many phases of climate change in our Earth’s history… Some warming, some icy cold, but the climate is always changing… So, you’re not going to get me to go down that rabbit hole of needing to change to electric cars because of climate change… No sir, not buying it!

Of course, if someone absolutely feels the need to own an electric car, more power to them, that’s the beauty of living in a free country, making decisions without government interference… But that’s not the direction we’re heading… In California you won’t be able to buy a gas-powered car after 2030… That’s government interference… And that’s what we’re going to have to get used to going forward…

 I truly believe that the U.S. will follow China eventually, and have a credit checking system for individuals… You should check that out on how it works in China, because someday…

Inflation is the main thing we need, as a country, to tame, we don’t want to let it get away from us, like Germany did in the 30’s, and like Zimbabwe did in the 2000’s… And Argentina has done several times in the past, and now Venezuela joins the list of countries with runaway inflation…

Ok, I’ve climbed back out of the rabbit hole, and will talk normally here on out today… I’ve got to settle down some though, and I have an idea on how to do that, add some levity to the letter… here goes…

On the thought of higher inflation, Dave Gonigam has this to say in his 5 Minute Forecast yesterday, “The cost of preventing your house from getting egged has gone up 13%,” says a snarky take at the Fark website.

With Halloween around the corner, the commenter is reacting to news that the cost of candy is up 13.1% year over year in the government’s aforementioned inflation report released last week.

That’s the biggest yearly jump in candy prices ever. “For comparison,” reports NPR, “it took nine years — from 1997–2006 — for candy prices to rise 13%.” Blame the current increase on a 17% jump in sugar prices.

“Costumes, too, may feel more expensive than usual,” NPR adds. “While the CPI report does not specifically track costumes, the price of clothing has jumped 5.5% since last year,” NPR adds. “Those crafty enough to make handmade costumes will feel the pinch even more: Sewing machines, fabric and supplies are up 11% since last September.”

There’s something perverse about do-it-yourself being more costly, no?” -Dave Gonigam, 5 Minute Forecast

Chuck again… That’s pretty clever, saying that to protect your house on Halloween, you need to give out candy, and candy will cost you 13% more this year, so that’s the price increase of the protection of your house, or… you can choose to get egged!

Hey, have you heard the news that 10 emoji’s have been cancelled by the Gen Z, cancel culture? No more thumbs up, or OK sign with your fingers…  Haven’t these people cancelled enough already? Now they are going after emoji’s?  Nothing is sacred with these people..  If you want the full list of emojis that going to be cancelled click this link: Gen Z has already cancelled the thumbs-up emoji. It’s not a fan of these 9 others (moneycontrol.com)

The U.S. Data Cupboard got off on the wrong foot for the week yesterday, when the Empire Region PMI (manufacturing index) came in a negative -9.1 following August’s negative -5.0…  A negative number here is not a good thing folks, and doesn’t bode well for the national number due in a few weeks.  Today’s Data Cupboard has Sept Capacity Utilization, and Industrial Production… Both should show the effects of higher interest rates on Corporations…

To recap… The dollar was getting sold yesterday, until a White Knight showed up to protect and save the dollar from falling more. Chuck believes the White Knight to be the PPT… China said that their banks were selling dollars and buying renminbi, thus killing two birds with one stone…  Gold was up $15 at one point yesterday, but was only allowed to gain $4 on the day… The BBDXY was flat on the day after having been down 9 index points during the day.

For What It’s Worth… In keeping with my “down the rabbit hole” thoughts this morning, this came to me from long time reader, Bob, and it’s about a warning from the central bank in Finland, and he found it on www.nakedcapital.com

Or, here’s your snippet: “Finland, like its Scandinavian peers, is among the world’s most cashless economies. But according to the central banker, now is not a good time to give up on cash.

Households in Finland should make sure they have some cash on hand, just in case the country’s payments system were to go down, warns Paivi Heikkinen, the Head of the Payment Systems Department and Chief Cashier at the Bank of Finland. In an interview {1} with the national broadcaster MTV3 on Tuesday, Heikkinen said (machine translated) her intention was not to “fabricate catastrophic scenarios”. That was before saying that in the worst-case scenario, the payments system could go down for a period of weeks.

“I don’t want to paint devils on the wall”, she said, “but now we are talking about more serious disruption than what has been brought up in the past”.

Since applying to join Nato in July this year, Finland has allegedly been the target of a number of cyber attacks, including a Denial-of-Service (DoS) attack that targeted the Finnish Parliament on August 09 2022, temporarily disabling the organization’s website. Since then, the State has begun awarding grants {2} of up to 100,000 euros to companies, large and small to help them bolster their cyber security.

Although Finland has not yet joined Nato, its foreign minister Pekka Haavisto recently said {3} it would still receive help from its Nato partners in the event of a direct threat, even before full membership. Now, a senior official of that country’s central bank is warning of a possible cyber attack against the payments system that could disrupt the system for over a week and is urging people to have some cash savings at home just in case.

Not a Good Time to Give Up Cash

The irony is that Finland, like its Scandinavian peers, is among the world’s most cashless economies. According to {4} the Bank of Finland, it is on track to become completely cashless by 2030. A survey conducted last year by the central bank found that only 7% of people use cash when making purchases. Ninety percent of the survey’s respondents said they pay for their groceries with a card or mobile payment app.

However, Heikkinen says that now is not a good time to give up cash completely, given the rising risk of attacks against Finnish infrastructure, including its payments system”

Chuck again… I’ll just remind you of this… just because this is going on in another country, doesn’t mean it can’t go on here… I’m just saying…

Market Prices 10/18/2022: American Style: A$ .6315,  kiwi .5694, C$ .7276, euro .9826, sterling 1.1300, Swiss 1.0003, European Style: rand 18.1056, krone 10.5306, SEK 11.1037, forint 420.10, zloty 4.8866, koruna 25.0163, RUB 61.97, yen 149.12, sing 1.4202, HKD 7.8495, INR 82.36, China 7.1993, peso 19.98, BRL 5.2693, BBDXY 1,336.64, Dollar Index 111.89, Oil $85.21, 10-year 4.00%, Silver $ 18.79, Platinum $923.00, Palladium $2,028.00, Copper $3.44, and Gold… $1,653.10

That’s it for today… What a great time at lunch yesterday, as it was great to see Dennis looking so goo, and eating again… I also got to meet his MIT grad, song, Dean, who is well spoken, and is probably the smartest guy in the room, at most times…  The restaurant is one of my faves, and I ended up eating more for lunch than I had in a long time! The last time I met up with Dennis was in 2018, before he was diagnosed with throat cancer… And Frank Trotter? Well, Frank looks the same to me today as he did 15 years ago, and is still of sharp mind, which is good because he has decided to do an EverBank2… And this time do it even better! His new bank is called Battle Bank, and you can see what he’s up to at www.battlebank.com  He received approval for the bank from the OCC last week, and now awaits the FDIC, with plans to open his virtual doors in February… I can’t wait for his virtual doors to open!  Mitch Ryder and the Detroit Wheels take us to the finish line today with their rockin’ song: Devil With the Blue I Dress…  I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

 

Chuck Butler

 

Rocktober 17, 2022

* Currencies and metals get sold on Friday last week

* Retail Sales are flat for Sept… 

Good day… And a Marvelous Monday to you! The National League Playoffs have a had a twist to them with major upsets of the Braves and Dodgers. Congrats to the Phillies and Padres for continuing their seasons… It took the Astros 18 innings to run the Mariners out of the Playoffs, and the Yankees / and Indians/ no I mean the Guardians will go to a fifth and deciding game tonight… I made it back home on Saturday without a major hitch, a lot of waiting though, which is not a good use of my day, when all those college football games were being played! Back to the cooler weather, which I find to be annoying at this point, after spending 10 days down south… Last week was my little Evie’s 3^rd birthday, and I was a total bad grandpa, by forgetting to mention it in the Pfennig! UGH! She’s 3 going on 13… I’m just saying! The Allman Brothers greet me this morning with their song: Statesboro Blues…

I woke up this morning, had those Statesboro Blues… Is how the song opens, and it aptly applies to my state of mind this morning… Gold got whacked again on Friday last week, and once again the price manipulators blamed their wreckage on the fact the 10-year Treasury traded with a 4% yield on Friday… I say hogwash! You price manipulators are making sure Gold doesn’t get a strong footing before it turns on a dime and heads higher, you might as well come out and admit that one, since your shorting has become so brazen…

Alrighty then, I got that off my chest! The dollar rallied on Friday, and even though the economic data was bad, it doesn’t mean anything any longer. More on the bad economic data later this morning, but first the wrap up from Friday… The BBDXY gained 9 index points on Friday. The Swiss franc fell below 1.00, for the first time, and the Russian ruble regained its recent lost ground. Gold lost $21.30, and Silver lost 58-cents on the day, which proves once more that the fundamentals don’t have anything to do with the performance of Gold & Silver, as long as the price manipulators have free reign…

All the Fed Heads are singing from the same song sheet these days, and St. Louis Fed President, James Bullard was no exception last week, saying that he supports two more large rate hikes, of 75 Basis Points each in Nov. and Dec. , which is a variance from the markets’ view that the Fed Heads would hike rates 75 Basis Points in Nov. but then opt for 50 Basis points in Dec. Either way, the Fed Heads are keeping to their word that they will not let up the rate hikes until inflation is defeated.

In the overnight markets last night… The dollar got sold, figures, the overnight markets see the rotten Retail Sales data, and the strong, stupid CPI and say, “We’re selling dollars”… It’ll be interesting to see if that carries over to the U.S. trading… The BBDXY is down 4 index points to start the day. Gold is up $13 in the early trading, and Silver has added 21-cents to its price to start the day.  The price of Oil has slipped to trade with a $85 handle, and the 10-year’s yield is 3.94% this morning, after having touched above 4.00% on Friday. 

So, why is everyone thinking of selling their Gold these days? I just don’t get it… You buy Gold as a hedge VS a dollar problem, and you buy Gold as a store of wealth… When stocks look like they are getting ready to jump off a cliff, without PPT intervention, that is, that’s the time you want to back the truck up and buy Gold for a new purchase, or to add to your portfolio..  I’m just saying…

I don’t say things flippantly folks… When I say that things are so rotten right now, that you should be adding to your Gold position, I say that with a lot of thought… One of these days, the price manipulators will be put out of business, I don’t know when, or I don’t know how, but they will, as my grandmother used to say, “All good things must come to an end”…  I truly believe that in the future, we will have a run on physical Gold, and when that happens, there won’t be enough physical Gold to fill all the orders, then the premiums will explode higher, and if you want to buy Gold then, it’ll be too late… It’s too late baby, now it’s too late, though I really did try and tell you…

Well, G-7 met last week… This from Reuters.com: “Japan and other countries facing the fallout from a soaring U.S. dollar found little comfort from last week’s meetings of global finance officials, with no sign that joint intervention along the lines of the 1985 “Plaza Accord” was on the horizon.

With a strong push from Japan, finance leaders of the Group of Seven advanced economies included a phrase in a statement on Wednesday saying they will closely monitor “recent volatility” in markets.”

Chuck again… Nope, no new “Plaza Accord” on the docket… but the statement was quite ominous, when they said they will “closely monitor volatility in markets”…  Well, that’s nice and all, but the volatility is already there, they should be on top of it now!

It was reported last week that the Asian Central Banks spent a lot of currency to stop dollar strength… this from Bloomberg.com “Asian governments spent about $50 billion in foreign-exchange reserves last month — the highest level since March 2020 — to defend their currencies from a relentless advance in the US dollar.”  You know that this is where I say something that I haven’t said in a long time because there’s been really no real intervention in the currency markets, and that is: “The markets have way deeper pockets than any Central Bank”…  And in this case it says that “Asian Central Banks” were intervening, but in my humble country boy opinion, it was Japan and China… doing the heavy lifting…

Speaking of Japan, and the yen… The yen fell to a 24-year low on Friday, last week… 148 is the handle of the yen at the close of business on Friday… Now I’m not saying that yen will fall to levels not seen since 1971 (350) but a weak yen is in the cards for some time folks… The Bank of Japan (BOJ) President, Kuroda, recently told his audience that he favors and will implement a “very easy monetary policy”…  Wait, What? You mean negative rates and bond buying isn’t already “a very weak monetary policy?” Well, bust my buttons, now I’ve heard it all!

I read a lot of articles this past weekend about how the “U.S. is poking the bear”, and hoping for a confrontation with Russia… Man, I hope that never happens in my lifetime, for it would lead to nuclear annihilation… That’s not a good thing, and I’m hoping this is all just saber rattling…

So, I’ve been telling you about how tough it is going to be for the U.S. to continue to issue Treasuries, when no one shows up at the auction window… Well, the Fed Heads must be reading the Pfennig, because, they issued a questionnaire last week to the Primary Dealers asking them “should the Fed buy bonds”?   Here’s a snippet on Reuters: “The U.S. Treasury Department is asking primary dealers of U.S. Treasuries whether the government should buy back some of its bonds to improve liquidity in the $24 trillion market.

Liquidity in the world’s largest bond market has deteriorated this year partly because of rising volatility as the Federal Reserve rapidly raises interest rates to bring down inflation.

The Treasuries market has swelled from $5 trillion in 2007 and $17 trillion in early 2020, while banks are facing more regulatory constraints that they say make it more difficult to intermediate trades.

The Treasury is asking dealers about the specifics of how buybacks could work “in order to better assess the merits and limitations of implementing a buyback program.”

These include how much it would need to buy in so-called off-the-run Treasuries, which are older and less liquid issues, in order to “meaningfully” improve liquidity in these securities.”

Chuck Again… Well, if this is going on now, we can expect a full-blown rate cutting, bond buying experience once the Fed Heads Pivot… And then we get to start the mess all over again! Whoopeee, where do I sign up for some of that? NOT!

The U.S. Data Cupboard late last week, first saw the stupid CPI report show inflation not letting up in September, and actually ran hotter than expected… We also saw the Weekly Initial Jobless Claims bump higher the previous week, and the continuing Jobless Claims remain high at 1.37 Million…  Then on Friday, was the piece de resistance… Retail Sales, which I had told you last week, that the BHI indicated that they would be flat, came in exactly at that, flat!  Or, as our illustrious POTUS would say, “we didn’t have ANY Retail Sales last month”… No, wait, he wouldn’t say that because that would be bad…  Anyway, I just wanted to point out that he had said that there was no inflation in August, when the August report was flat….  Fun memories, huh?

The Retail Sales figures had some interesting tidbits, like how most of the purchases were made with credit cards… OK, I get it, credit cards are easier to carry around than cash, but if the credit card balance doesn’t get paid off at the end of each month, that’s a bad thing, folks… I’m just saying…

Oh! I just had a thought about why people are running up credit card debt… They aren’t thinking that the Gov’t will bail them out an pay their debts at some point in the future are they? Nah… people aren’t that smart… Or, maybe they are… They saw the Student Debts get bailed out, why not credit card debts?  I’m from the gov’t and I’m here to help you… Help you into servitude to the gov’t is what they should be saying!  But that’s another discussion for another time… 

This week’s Data Cupboard gets off to a slow start today, with only the Empire Region PMI (manufacturing index)…

To recap… The dollar rallied on Friday last week, But got sold in the overnight markets last night…  Gold is getting sold nearly every day now, and Chuck is of the belief that the price manipulators will one day be put out to pasture… And then that happens, it’ll be too late baby, now it’s too late (Carol King) to buy physical Gold…  And U.S. Fed is asking banks if the fed should be buying bonds?  I know, I know, that sounds ridiculous, because what are the banks going to say, “No, we will take the bonds off your hands and limit our ability to lend people money?”  I say no more…

Before we head to the Big Finish, I wanted to mention how sad I was hearing the news that Cardinals’ all-time best, relief pitcher, Bruce Sutter, had passed at just 69 years of age…. I remember that during his 4 years with the Cardinals, that the other team would begin to pack up their bats whenever he came in the game! 

RIP Bruce Sutter… 

For What It’s Worth…  well… things are getting very weird out there folks… I know, most of you have your lives to live, and don’t need to be worrying about all these weird things… But for those of us that do… Here’s an article that talks about a lot of it… and it can be found here:  Banking crisis — the Great Unwind – Research – Goldmoney

Or, here’s your snippet: “There is a growing feeling in markets that a financial crisis of some sort is now on the cards. Credit Suisse’s very public struggles to refinance itself is proving to be a wake-up call for markets, alerting investors to the parlous state of global banking.

This article identifies the principal elements leading us into a global financial crisis. Behind it all is the threat from a new trend of rising interest rates, and the natural desire of commercial banks everywhere to reduce their exposure to falling financial asset values both on their balance sheets and held as loan collateral. And there are specific problems areas, which we can identify:

It should be noted that the phenomenal growth of OTC derivatives and regulated futures has been against a background of generally declining interest rates since the mid-eighties. That trend is now reversing, so we must expect the $600 trillion of global OTC derivatives and a further $100 trillion of futures to contract as banks reduce their derivative exposure. In the last two weeks, we have seen the consequences for the gilt market in London, warning us of other problem areas to come.

Commercial banks are over-leveraged, with notable weak spots in the Eurozone, Japan, and the UK. It will be something of a miracle if banks in these jurisdictions manage to survive contracting bank credit and derivative blow-ups. If they are not prevented, even the better capitalised American banks might not be safe.

Central banks are mandated to rescue the financial system in troubled times. However, we find that the ECB and its entire euro system of national central banks, the Bank of Japan, and the U.S. Fed are all deeply in negative equity and in no condition to underwrite the financial system in this rising interest rate environment.”

Chuck again… As Ed Steer said in his Saturday letter, Alasdair has more to say in addition to this snippet, so if you have the time, click the link above, and have at it!

Market Prices 10/17/ 2022: American Style: A$ .6247,  kiwi .5601,  C$ .7243, euro .9757, sterling 1.1306, Swiss .9986, European Style: rand 18.1318, krone 10.5991, SEK 11.2736, forint 429.15,  zloty 4.9353,  koruna 25.1788, RUB 61.95, yen 148.82, sing 1.4261, HKD 7.8499, INR 82.35, China 7.2009, peso 20.01, BRL 5.3260,  BBDXY 1,345.75, Dollar Index 112.92,  Oil $85.73, 10-year 3.94%, Silver $18.60, Platinum $914.00, Palladium $2,017.00, Copper $3.46, and Gold… $1,658.18

That’s it for today… I’m so excited now that I’ve finished the letter today! I’m excited because for lunch today I will be sharing notes, thoughts, ideas, with Dennis Miller, and Frank Trotter!  Dennis is driving to St. Louis from Evansville Indiana, so he gets the prize for coming the furthest!  This will be a very good meeting, and one that’s long overdue! It’s really cold outside this morning! YIKES! Where did Fall weather go, we’re already in winter! YUCK! I thoroughly despise cold weather… I’ve gotta go where it’s warm (Jimmy Buffett) I’m really excited about this coming weekend, as me and my oldest son, Andrew, will return to his alma mater, the U. of Missouri (Mizzou) for the homecoming football game! At least it won’t be freezing when I go this year! Elton John takes us to the finish line today with his song: Honky Cat… I hope you have a Marvelous Monday today, and will continue to Be Good To Yourself!

Chuck Butler

Rocktober 13, 2022

* Currencies trade flat on Wednesday… 

* A record increase for COLA? 

Good Day… And a Tub Thumpin’ Thursday to one and all… Another day in paradise yesterday, without the rain the weather app said was going to come down on us during the day… YAHOO! We did some exploring of the region yesterday, for the benefit of one our guests, who hadn’t been here before. The Divisional Series in baseball continued last night with both teams that had lost the previous night, reversing the outcome… So, both series are tied 1-1… Man, I’m really dragging the line this morning… I have no idea how long the letter will be this morning due to me dragging the line… The great Al Stewart greets me this morning with his song: On The Border…

Well, bust my buttons! I really led you down a bad rabbit hole yesterday, when I reported that the price of Oil had dropped to $80… I swear on a stack of bibles, that is what I saw when I pulled up my Oil price page on the internet, only to see it at $88 an hour later!  So…that’s my mea culpa for today…

The dollar buying abated yesterday, and for the day, the BBDXY was flat at 1,346… So, that meant that the currencies are trading in the same clothes as they had on yesterday at this time.. Sure there are some different numbers, but the changes are so small that there’s no sense in trying to pick out a rallying currency… 

I do want to point out how weak the Swiss franc has been recently…This morning, the franc is teetering on the edge of parity with the dollar… I don’t believe I’ve ever seen the franc this weak… I’m just saying

Gold found a way to carve out a $7 gain yesterday without any interference. Silver lost 12-cents on the day, so it wasn’t a total good day for the metals… Gold closed the day at $1,674.90, and Silver closed at $19.10…  The price of Oil slid by a buck and ended the day with a $87 handle, and bonds got bought yesterday with the yield on the 10-year Treasury dropping to 3.88%, from the 3.95% to start the day.

In the overnight markets last night… The dollar is still drifting, and BBDXY index is flat again at 1,346… Have the dollar buyers run out of steam? It sure appears that way, but I doubt it… The dollar is the king currency now, and will continue to be as long as the Fed Heads remain vigilant about hiking rates. There! I said it… of course there’s no guarantee that the Fed Heads will remain vigilant, in the face of an ongoing recession in the U.S. economy. Recall that I told you months ago when the Fed Heads began to hike rates that no central bank has ever hiked rates during a recession… So, this experiment is going to get a test to see if it works… I’m thinking that it won’t, because of the Fed Heads’ track record…

Well, here’s some good news for retirees… On Thursday, the U.S. government is set to announce how big a percentage increase Social Security beneficiaries will see in monthly payments this upcoming year. It’s virtually certain to be the largest in four decades. The increase is estimated to be 8.7%, the largest since 1981 Now, in recent times, whenever the COLA increased for social security payments, the premiums for Medicare increased too… But apparently a 3% cut in Medicare premiums has already been announced… So, overall this is good new for retirees…

In news that’s not good for anyone, the St. Louis Post Dispatch reported last night that Spire, the natural gas company in our region, is requesting a 10% increase in the price of natural gas… YIKES!

I mentioned above that the Swiss franc is trading very near to parity with the dollar… The Japanese yen is at 25 years lows, the euro is trading at multi-year lows, and the pound sterling is hanging on by a thread… All of these currencies are considered to be “Major Currencies” and all could be traded as offsets to the dollar at one time or another, with the euro the current offset to the dollar.  The yen and franc used to be considered as “safe haven currencies” … Not any longer…

I’m still reeling from the news that Big Ben Bernanke won a Nobel Prize for Economics…  Aren’t you? I mean if this man that brought on ZIRP (zero interest rate policy) and Quantitative Easing won a prize then that beats all.  Here’s a man who said he studied the great depression and that he knew what caused it and how to get out of it… All I’m saying here is that his policies have grown to hurt the U.S. economy, balance sheet, and future…

The U.S. Data Cupboard today has the stupid CPI (consumer inflation) for Sept. There’s really no comparison to how inflation is computed these days VS the tried-and-true way of doing it like it was done before 1990… The current CPI is 8.5%, while the shadowstats.com inflation rate is more an 16%… But the markets get all lathered up over the stupid CPI, and there’s no explanation as to why? The markets have to know that the CPI is weighted, substituted for, and massaged each month, but they continue to follow it religiously…

Yesterday’s Data Cupboard has the Sept. PPI (whole sale inflation)  And it showed that: “Wholesale prices rose more than expected in September despite Federal Reserve efforts to control inflation, according to a report Wednesday from the Bureau of Labor Statistics.

The producer price index, a measure of prices that U.S. businesses get for the goods and services they produce, increased 0.4% for the month, compared with the Dow Jones estimate for a 0.2% gain. On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August.

Inflation has been the economy’s biggest issue over the past year as the cost of living is running near its highest level in more than 40 years.

The Fed has responded by raising rates five times this year for a total of 3 percentage points and is widely expected to implement a fourth consecutive 0.75 percentage point increase when it meets again in three weeks.”   – CNBC.com

To recap… There’s not much going on in the markets, the dollar was flat all day yesterday and overnight, Gold carved out a $7 gain yesterday, but is flat this morning. Silver lost 12-cents yesterday, but is up 8-cents this morning.  The Social Security payments could be getting a record increase that will be announced later today… And Chuck finally gives in and says the dollar is the king currency…

For What It’s Worth… Well, with the markets on hiatus there’s little in the way of FWIW worthy news articles out there, but I did find this one that refers to something I mentioned above this morning, and that is can the Fed Heads remain vigilant with their rate hikes?  The article can be found here: Analysis: As markets fret, Fed officials reject idea of rising financial stability risks | Reuters

Or, here’s your snippet: “Federal Reserve officials are pushing back on investors’ mounting concerns that the U.S. central bank’s aggressive campaign to counter high inflation is setting the stage for a market crack-up.

Central bankers’ confidence is countered by wide-ranging fears among market participants who see bond market liquidity strains, damaging asset price declines as well as a range of problems in markets abroad. Some see this landscape as dire enough to call for the Fed to slow or even consider stopping its interest rate increases, something officials have so far shown no appetite for as they contend with the worst inflation surge in 40 years.

“We have to be monitoring things in the financial markets, and we have to be looking for vulnerabilities as you’re increasing rates,” Cleveland Fed President Loretta Mester told reporters on Tuesday, especially in an environment where all the world’s major central bankers are moving in the same direction toward tighter monetary policy.

“That’s when these vulnerabilities that you don’t necessarily see in normal times, and you’re not changing rates, can come out,” Mester said. But as things now stand, “I don’t see hidden big pending risks out there” and “there’s no evidence disorderly market functioning is going on at present.”

Chuck again… And she wouldn’t see any disorderly market until it was too late! But the crybabies on Wall Street don’t care about the fact they have to pay more for their steak dinner, and bottle of Dom Perignon… They only care about the Fed feeding the markets with zero rates and liquidity, so the Fed Heads’ work is cut out for them here…

Market Prices 10/13/2022: American Style: A$ .6282, kiwi .5619, C$ .7241, euro .9723, sterling 1.1149, Swiss $1.001, European Style: rand 18.2626, krone 10.6905, SEK 11.3281, forint 444.68, zloty 4.9864, koruna 25.2900, RUB 63.53, yen 146.81, sing 1.4389, HKD 7.8495, INR 82.35, China 7.1881, peso 19.97, BRL 5.3039, BBDXY 1,346.57, Dollar Index 112.74, Oil $87.25, 10-year 3.88%, Silver $19.18, Platinum $887.00, Palladium $2,147.00, Copper $3.46, and Gold… $1,674.89

That’s it for today and this week… It’s been an interesting week of writing, and I’m sure next week will be even more interesting, as these things all seem to coming to a head faster and faster… My beloved Mizzou Tigers have a bye this week… When I was a young man if we wanted to put down a team badly, we would say that they “couldn’t beat bye”… HA! Our Blues start their season Saturday night… Hockey is a long season, and there’s reason to get all lathered up for early season games, but…having said that, there’s a lot to be said for getting a good start!  So, Let’s Go Blues!  The Beatles takes us to the finish line today with their song: When I’m 64… “will you still need me, will you still feed me, when I’m 64?”  yeah, that song… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… And don’t forget to Be Good To Yourself!

 

Chuck Butler

 

Rocktober 12, 2022

* Currencies & metals get sold on Tuesday

* Big Ben Bernanke wins what? You’ve Got To Be Kidding me! 

Good day… And a Wonderful Wednesday to you! Well the 2^nd round of the MLB Playoffs began yesterday with all 4 games in play… At this point, I really don’t care who wins, but I can tell you that I am rooting for the Indians, I mean the Guardians VS the Yankees… That won’t make some readers too happy, that are Yankee fans, but it is what it is… The Loggerhead Marina is a must-see place when down this way. They rescue turtles at sea, operate on them, bring them back and then release them into the open sea again, once they are recovered. We all visited the Loggerhead Marina yesterday, and I was impressed to say the least, at the work they do… The Guess Who greets me this morning with their song: Undun…  This is a very jazzy rock song by the Guess Who, who featured one of my fave singers, Burton Cummings… 

Well, another day, another day of dollar strength, folks… You know, if the U.S. was held to the same standard as the economies of the Eurozone, and other countries throughout the world, the dollar wouldn’t be so popular.. But the double standard that exists in the currency markets, still holds true, and as long as It does, then we’ll have dollar strength… If you’re new to non-dollar investing, this has to be a fantabulous time to enter the markets… For you can buy more of the foreign currencies than you would be able to now for at least 20 years!    When the prices of the currencies are as cheap as they are today, then it means you can buy more of them for your dollars… No sense in buying them when the euro was 1.50, and Aussie dollars were $1.15! No, instead you should look to buy now when the euro is 97-cents, and the Aussie dollar is less than 63-cents! I’m just saying…

The price of Gold saw another day of price manipulation yesterday that was so apparent…. At one point yesterday, Gold had rallied back from its $7 loss, and was positive by $6.00… But then it wasn’t positive by $6, and ended the day down $2.70… The price manipulators couldn’t dare have Gold go higher on the day…  I’m just saying…

Silver also lost ground losing 47-cents… The Silver losses this past week have been HUGE, and the takedowns have been harsh! But, given these lower prices, what will you do with them?

The price of Oil traded flat to up a buck yesterday, and ended the day trading with a $89 handle. And bonds saw more selling and the yield of the 10-year Treasury rose to 3.95%… It won’t be long before the bond traders get control of this market once again, and get yields heading over 4.0%…

In the overnight markets last night…  the dollar was flat to down a bit, with the BBDXY dollar index falling 1 index point overnight. Gold is up $2 in the early trading, but as we all know by now, that’s not a beginning of an up day, for there are too many mines for Gold to have to avoid… The price of Oil fell out of bed yesterday, and last night, with Oil trading with a $80 handle this morning…  The IMF had something to do with this price drop, and we’ll talk about that in just a minute…   Bonds are drifting but with a bias to see prices drop and yields rise… 

What the heck has happened to the integrity of the NOBEL people? Did you hear that gave a Nobel Prize in economics to Ben Bernanke? Wait, What? Yeah, Big Ben received a Nobel Prize in economics and with that, every previous winner of the economics prize threw their prizes out the window, for they no longer have any value! HA!  I’m beside myself this morning, thinking about this, and how the ponzi scheme of Quantitative Easing was Big Ben’s big contribution to our mess, and he gets a prize for this? 

Big Ben receiving a Nobel Prize tells me that the committee at the NOBEL institution still have a sense of humor…  I’m just saying…  

I saw this quote from Sprott Inc.,  yesterday regarding the dollar and Gold… “”The U.S. dollar lifeboat is no longer safe for occupancy.

The wait for gold to be rediscovered as a safe haven is nearing an end.”

Well, the IMF has thrown its hat into the ring of outfits calling for a slowdown not only in the U.S., Eurozone and China, but throughout the globe… Let’s listen in: “The IMF’s latest World Economic Outlook report as the organization forecasts that, excluding the unprecedented slowdown of 2020 because of the coronavirus pandemic, next year’s performance would be the weakest since 2009, in the wake of the global financial crisis.

The IMF cut its forecast for global growth next year to 2.7%, from 2.9% seen in July and 3.8% in January, adding that it sees a 25% probability that growth will slow to less than 2%.”

Chuck again…kind of eerie isn’t it? I mean that should we all just sit around and wait for country after country to fall because of too much debt and not enough growth? Or should we back up the truck to the Gold window?  Well, dear reader you know me, and you know what I would do… But the question remains, what will you do?

And this IMF warning probably had something to do with the Oil price drop, we talked about previously. For if there’s no global growth, the demand for Oil will wane, and that’s what has scared the bejeebers out of Oil traders and investors…

So, do you remember the spring of 2021 when I gave you that soul searching Pfennig about how too much debt around the world would begin to show up in defaults of countries?  It would start with a small country, and then seeing that the world didn’t end because of the default, another country would bit the dust, and another, and another, and soon it would reach a crescendo… This is when the U.S., with its back up against the wall, decides to announce their digital currency…  It’s getting closer, and closer all the time to becoming a reality, folks…  Got Gold?

The U.S. Data Cupboard yesterday, had nothing for us… And today’s cupboard only has Producer Price Index for Sept, and… FOMC Meeting Minutes from their last meeting… The markets will be looking for any signs that the Fed heads are wavering on their mission to continue to fight inflation with rate hikes. There is a portion of the markets that are still of the opinion that the Fed Heads are ready to pivot on rate hikes… Well like a broken watch, which is right two times a day, these traders will hold onto to their opinions until the Fed Heads do pivot, which could come 2, 3 meetings down the road…

To recap… It was another day, another dollar rally in the markets yesterday. The dollar strength is so overbearing right now that people are beginning to see the damage the dollar strength might have and it won’t take much longer for this all to come to fruition. I’m just saying…

For What It’s Worth… I teased you bit above with hints about this FWIW article today, and so here it is, this is an article that highlights how the dollar’s demise is on the horizon, and Gold’s run higher will be the offset of that dollar demise, and it can be found here” Sprott: The Dollar, Safe Haven or Leaky Lifeboat? – DollarCollapse.com

Or, here’s your snippet: “The “strong U.S. dollar” has been, of late, the most topical affliction for gold. Already sagging under the weight of hawkish Fed speak, receding financial liquidity, competition from crypto and disappointment from its failure to rise to new highs on the back of high inflation. The investment consensus appears to be one of highly convicted bearishness. Technical charts bear this out, with the metal breaking to a three-year low. The U.S. dollar lifeboat is no longer safe for occupancy.

The parabolic ascent of the U.S. dollar (USD) against all currencies and commodities, however, contains the seeds of its own demise. It is akin to the panicky overcrowding of a leaky lifeboat. The facade of USD strength foretells a comeuppance for all paper currencies: A steep devaluation relative to gold. As noted by economist Mohamed El-Erian, the “relentless appreciation of the dollar is terrible news for the global economy.” (Fortune, 9/26/2022). It is the latest and maybe final refuge of safety certain to disappoint clingers on as much as the late lamented “ultrasafe” refuge, U.S. government debt securities which are down 12.47% year-to-date through October 3, 2022.

What comes next? Could it be the rediscovery of gold, the one and only safe haven still relatively unscathed?

The kiss of death for the strong USD may well have been delivered by the Bloomberg Businessweek cover below. Overcrowded consensus trades are often top-ticked by magazine covers, a long-standing media tradition in keeping with Business Week’s “Death of Equities” cover in 1979.

While the Fed may have been resolved at one time to look askance at the damage to the U.S. equity and bond markets when it embarked on its anti-inflation crusade, we believe that it was ignorant, even clueless, as to the economic repercussions of rising interest rates and draining liquidity. We have long believed that the consequences of applying a tight money regimen are different this time. The difference between the days of Paul Volcker and today is the much greater level of leverage in the U.S. and the world economy. The financial system of 2022 was built on submarket interest rates. What was painful medicine in 1980 is poison to the financial system of 2022.”

Chuck again… The article goes on to explain how Gold will soon be viewed as a rescue asset away from the dollar… I don’t know if this will come true or not, but to me, it all makes abundant sense!

 

Market Prices 10/12/2022: American Style: A$ .6259, kiwi .5690, C$ 7252, euro .9714, sterling 1.1076, Swiss 1.0004, European Style: rand 18.2068, krone 10.7253, SEK 11.3503, forint 442.22,  zloty 4.9994, koruna 25.2787, RUB 64.39, yen 146.40, sing 1.4360, HKD 7.8500, INR 83.3112. China 7.1711, peso 20.05. BRL 5.3039, BBDXY 1,145.53, Dollar Index 113.80, Oil $80.62, 10-year 3.95%, Silver $19.20, Platinum $806.00, Palladium $2,158.00, Copper $3.45, and Gold… $1,669.91

That’s it for today… It was very cloudy outside when I woke up this morning, but just wen the sun was about to peek over the ocean, the clouds parted, and opened up space in the horizon for the sun to rise up over the ocean unimpeded… Simply beautiful! Baseball got back in gear yesterday with 4 games, and the surprise game of the day was the Phillies beating the Braves… Another beautiful day down south here for us yesterday… My weather app, which is normally pretty bang on, once again said that we could have rain during the day, only to not have rain, but full sunshine all day long! YAHOO!  Well, let’s see here… Spirit takes us to the finish line today with their song: Nature’s Way…  This song has special meaning to me, if you know me, and know the words, you’ll understand why… I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!

Chuck Butler