Author: admin

August 24, 2022

*OPEC’s Warning lights a fire… 

* Bad data in the U.S. means strong dollar… go figure… 

Good Day… And a Wonderful Wednesday to you! Another Chamber of Commerce Day here in my little river town yesterday. This year’s version of the dog days of summer, has been very pleasant… Last night as i sat outside watching my beloved Cardinals, it got chilly, and I ended up going back inside to watch the rest of the game. I just don’t recall an August with weather like this… My grandkids went back to school yesterday, along with the teachers, Dawn and Andrew.. Robert Palmer greets me this morning with his song: Put On Your Sailing Shoes… 

Well, we had a rally of sorts yesterday in the currencies and metals… The BBDXY lost 5 index points and fell back to finish the day at 1,288. The euro remained under 1, however, and even with the drop in the BBDXY, the currencies still look very sickly and in need of a medicine..  The dollar is very overbought at this point folks… And usually, the markets will correct an overbought position, but who knows what these boneheads are going to do now? 

Gold finally found a bid yesterday and ran with it, gaining $11.40 on the day to close at $1,748.30… This rally could be seen as the start of something, but I doubt that it will, as the strong dollar right now is smothering everything else around it, and it will take some time for all that to be removed…  Silver also found a bid yesterday, and gained 12-cents to close the day at $19.21

That warning I told you about yesterday, from the folks at OPEC regarding how they would Act if the markets didn’t iron out the hinky pricing of Oil, has resonated with traders, and the price of Oil gained another $2 yesterday, and ended the day trading with a $94 handle…  That’s an $8 gain in the last 4 trading days for the price of Oil, which last week at this time was sporting an $86 handle… 

The yield on the 10-year Treasury rose again and this time to a 3.05% yield yesterday…  This rise in the 10-year’s yield has got to be an answer to the light bulb going on in Traders’ heads that I talked about on Monday, that centered around traders finally getting the message that the Fed Heads are going to keep hiking rates. 

Speaking of the Fed Heads keeping their rate hike hats on…  I had been under the impression that the Fed Heads would opt to hike rates 50 Basis Points at the September meeting, instead of the 75 Basis Points that has been their level of choice the previous two meetings… But, the more I think about this, the more I’m inclined to say that the Fed Heads will keep their rate hike at the 75 Basis Points level…  

I say that because, in my heart of hearts, I have to think that the Fed Heads see their dilemma of being so far behind the inflation rate and that they need to play catch-up…  I do admit though, that my hope that they see their dilemma is overweighing my first thought that they are all a bunch of knuckleheads and if there’s a way to screw this up, they will find it… 

In the overnight markets last night, it was as I expected it to be, a giving back session… The dollar got bought overnight, and the BBDXY has gained back 3 index points of the 5 it lost yesterday. I’m still thinking that the dollar is overbought at this point, and something has to give soon… Apparently, yesterday was not the “soon” we were looking for! 

Gold starts the day down $4, and Silver down 18-cents… UGH! Of course, these are small numbers that could easily be overcome today, but that’s not the trend that we’ve seen lately, with the daily trading.  So, I’m not hopeful at this point of the morning. 

Well, it’s that time of year again, when all the elites in the financial world gather for a major boondoggle in Jackson Hole Wyoming… And this coming Friday, the Big Fed Head, Jerome Powell, will be speaking, and the markets will all be listening to see if he gives any hint as to how the Fed Heads will vote at the next FOMC. 

Powell’s speechwriters must be going bananas, because the Personal Consumption Expenditures (PCE) will print on Friday morning, just ahead of his talk… For, if the PCE shows that inflation has weakened, it could change his talk, and on the other side if the PCE remains strong, it could change his talk… What to do, what to do?  

The markets are ga-ga over what the Fed Heads have to say… C’mon wake up! The Fed Heads are not the panacea here… They are not going to save us from the evils of a debt ridden, inflation racked, everything bubble, economic mess!  Nope, it’s not going to happen folks..  And as soon as the markets finally get the memo on that, the dollar will continue to be overbought. 

The U.S. doesn’t have inflation cornered…. it’s soaring all over the globe, and in Europe it’s worse than it is here, that is if you use the stupid CPI that the BLS hedonically adjusts as a comparison.  The Eurozone PMI (manufacturing index) dropped below the line in the sand, 50 level last month… So, Europe not only has inflation soaring, they also have a recession on the way, just like the U.S. has seen… 

In the “old days”, I used to say that whatever goes on in the U.K. it comes on our shores a few months later… But that’s back when everything in the markets made sense, and things were different than they are today… 

I sit here each day for hours and try to figure out what the hell is happening with Gold, as inflation continues to be at the top of the list of articles that get printed…  Then I read this piece on Kitco. com that made sense… Check it out: “After falling 3% last week, gold was trading near three-week lows Monday as the strong U.S. dollar continued to pressure the metal. But there could also be another reason for gold’s poor price performance, according to Bloomberg Intelligence.

Year-to-date, gold is down 4.3% despite massive inflation concerns, which are still top of mind for central banks worldwide. And one potential explanation could be that the gold market has been looking for deflationary forces to win out in the long term.

“Gold’s poor performance despite the greatest inflation in 40 years may show that the metal, considered a store of value, has been anticipating enduring deflation and is resuming its propensity to outperform most commodities,” Bloomberg Intelligence senior commodity strategist Mike McGlone said in a note Monday.”

Chuck Again…  OK… I explained this to you before, but here goes again… When prices soar, as they have here in the U.S., consumers change their priorities in what they buy and don’t buy… So, let’s take widgets… As widgets get overpriced, consumers stop buying widgets, and that causes the prices to drop because no one is buying widgets…  deflation… 

I don’t know and it’s too early to tell for sure, if this deflation thing is going to come to fruition… We’ve got to get through the soaring inflation first, and I don’t see that happening any time soon.  but the metals traders are “looking ahead” apparently… ? 

The U.S. Data Cupboard yesterday had two very scary headlines: 

U.S. Services Sector Collapsed in Augus

U.S. New Home Sales Crashed in July       

And the dollar gets bought overnight? How on earth did those traders figure that the dollar needed to be bought after seeing those two data headlines?   I shake my head in disbelief, folks… 

Today’s Data Cupboard has the Durable Good Orders, and Capital Goods Orders for July… I don’t expect them to show any goodness in these data prints… But in the past few months, bad data in the U.S. is good for the dollar… Go figure!  I have a FWIW article for you today that will give you the willies, so stay tuned! Don’t touch that dial! 

To recap… The dollar backed off its recent domination of the currencies and metals yesterday, but only briefly, as the overnight markets returned to dollar buying. OPEC’s warning seems to have done the trick with the price of Oil gaining again, after OPEC warned traders about their trading of Oil and its hinky prices… Chuck talks about deflation, following inflation this morning, you won’t want to have missed that!

Before we head to the Big Finish today, I have a bone to pick… Well, I received word last night that the POTUS is getting set to announce that the US Govt will forgive student loans of $10,000… that’s just great! Who’s going to pay for that. Well, I am, and you are that’s who! And to think I was finished paying college tuitions after I paid in full for all three of my kids to attend college! Silly me! This news ticks me off to no end! 

For What It’s Worth…  Well, this is a good FWIW article in that it expressed fear about the situation in the U.S. and it can be found here: Can’t Pay Utility Bills? 20 Million US Homes Behind on Payments, Facing Shutoffs – Bloomberg

Or, here’s your snippet: “Adrienne Nice woke up early on the morning of July 25 to news she’d been dreading. The power company, Xcel Energy Inc., had shut off the electricity to the small Minneapolis apartment she shares with her teenage son, just as a heat wave was bearing down on the city.

Nice had been struggling financially ever since the pandemic hit, racking up more than $3,000 in past-due utility bills. The warnings she’d gotten on her monthly statement—“FINAL NOTICE” scrawled in big, bold letters—had prepared her to some degree, but it was still jarring to find the fridge dark and the air conditioner silent. With temperatures set to reach 95F (35C) in the coming days, she needed the power back on, and fast.

The Nice household is one of some 20 million across the country—about 1 in 6 American homes—that have fallen behind on their utility bills. It is, according to the National Energy Assistance Directors Association (Neada), the worst crisis the group has ever documented. Underpinning those numbers is a blistering surge in electricity prices, propelled by the soaring cost of natural gas.

 

The power bill crisis is even more acute in Europe, where the spike in natural gas prices has been far greater in the wake of Russia’s invasion of Ukraine. Policymakers there have sprung into action, throwing billions of euros in aid at struggling families to help them pay bills. There’s been no meaningful talk of doing anything on a similar scale in the US, where the hand-wringing has been dedicated, as always, to the gyrations of gasoline prices at the pump.

Utility shutoffs can have deadly consequences, though, a risk that’s becoming more palpable as summer heat shatters records. Already gut-punched by soaring prices for just about everything, more and more people are facing a choice among food, housing, and keeping the power on. “I expect a tsunami of shutoffs,” says Jean Su, a senior attorney at the Center for Biological Diversity, which tracks utility disconnections across the US.”

Chuck again… 20 Million homes can’t pay their utility bill?  And that’s just the start of it, I’m afraid… Recall I said above about how consumers have to decide what to spend money on these days and what not to spend money on…  Apparently 20 Million homes have decided that they wont’ pay their utility bill… 

Market Prices 8/24/2022: American Style: A$ .6898,  kiwi .6178,  C$ .7698, euro .9930, sterling 1.1786, Swiss $1.0313, European Style: rand 17.0380, krone 9.6946, SEK 10.6664,  forint 414.13,  zloty 4.8040,  koruna 24.7965, RUB 60.26, yen 136.73, sing 1.3954, HKD 7.8467, INR 79.81, China 6.8690, peso 19.95, BRL 5.1059,  BBDXY 1,291.21,  Dollar Index 108.92, Oil $94.53, 10-year 3.05%, Silver $19.03, Platinum $881.00, Palladium $2,006.00, Copper $3.65, and Gold… $1,745.60

That’s it for today… Well, my beloved Cardinals had to settle for a split in their doubleheader yesterday with the Cubs. I don’t believe the Cardinals’ bats arrived from Arizona until the second game yesterday… I got to see a former colleague and longtime friend at lunch yesterday. Ann Hopkins came to Fenton! Good friends, Duane and Mike joined me outside yesterday afternoon for the 1st game of the doubleheader, but then I sat outside by myself for the second game… Poor, poor pitiful me (Linda Ronstadt) HA!  The Counting Crows take us to the finish line today with their song: Round Here…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!

Chuck Butler

 

 

August 23, 2022

* Currencies & metals get sold on Monday

* Chuck steps out of his lane and makes a call… 

Good Day… And a Tom Terrific Tuesday to you! Has anyone else been following the resurgence of Albert Pujols? Just a week ago he was 11 home runs away from 700… At that time I didn’t believe he would get enough at bats to reach 700… But now a week later, he’s only 7 away! And the other teams the Cardinals are playing are doing the Cardinals and Pujols a big favor by pitching left handers! Oh, and Albert’s home run last night was the only run in a 1-0 win for the Cardinals over the Cubs…  And another wonderful day, weather-wise here in my little river town! The Kinks greet me this morning with their song: Sunny Afternoon…

Well, the dollar buying continued throughout the day yesterday, with the BBDXY gaining 5 index points. The dollar pushed the euro to a 2 decade low below parity. I found this on Bloomberg.com “The euro fell to a new two-decade low as a resurgent dollar and the prospect of a difficult winter for the region begin to bite. The drop is just the beginning of a deeper descent for the currency, according to strategists.

The common currency fell as much as 1.1% to 0.9928 Monday, below the prior two-decade low of 0.9952 reached in July — shifting away from a brief period of relief that propelled the euro to about $1.03 earlier this month. The currency was trading Monday at levels last seen in 2002, just a few years after the currency came into existence.” 

And needless to say, but I will anyway… The rest of the currencies fell in behind the Big Dog, euro, and look very sickly once again… 

Gold found a way to gain back some of its $12 early morning loss, and ended the day down $10, with a price of $1,737.90. Silver also fought back a bit and turned its early morning loss of 18-cents to a loss of 7-cents and climbed back over $19… Silver’s close was $19.09

The price of Oil was steady Eddie yesterday and remained in the $90 range all day… I also found this on Bloomberg.com this morning: “Oil clung to $90 at the conclusion of a volatile session after Saudi Oil Minister Prince Abdulaziz bin Salman warned the disconnect between the futures market and supply fundamentals may force OPEC and its allies to act.

West Texas Intermediate pared more than $4 of losses intraday to settle above $90 a barrel, still finishing cents below the previous session. The Saudi oil chief warned that “extreme” volatility and lack of liquidity in the futures market are moving prices in ways that don’t conform to fundamental supply-and-demand factors. The divergence may prompt the OPEC+ alliance to act.”

Chuck again… Yes, if you would have asked me, I would have told you that I thought something was “hinky” about the price of Oil lately… The article didn’t say what the OPEC members could do to “act”, but whatever it is, I’m sure it will help the price of Oil to rebound.

Bonds saw the 10-year’s yield rise to 3.01% to end the day yesterday… I don’t think that the rise of the 10-year’s yield is going to stop there… I’m just saying…

In the overnight markets… There’s been little movement, as the BBDXY has gained only 1/2-index point. The euro has dropped further, and unless the dollar is about to reverse this strong trend, it doesn’t look good for the single unit…  Gold & silver are not starting the day on the right foot, with both down just pennies to start the day, but down, nonetheless. 

The price of Oil has gained $2 in the overnight markets, I think, on the OPEC warning… But then only the Shadow knows with these markets! Oil is trading with a $92 handle this morning. Bonds were stuck in the mud overnight, and the 10-year’s yield remained at 3.01%… 

Well, the Bears got their revenge on the stock market Bulls yesterday, and the Bear Market rally came to an end, as the Dow lost 640 Points… I’m not turning into a stock jockey, just wanted to point out that this is the beginning of what could be a decade of no returns for stocks…  Don’t worry, I hear your broker saying to you, “stocks always come back”… But, are you of the age that would allow you to benefit from owning stocks for the next ten years before they began to rally again?  The Wall Street Journal said that stocks could be in a decade of losses… Stifel’s chief equity strategist also said the same thing… So, see it’s not just me…

OK, that was me stepping out of my lane to make that call… I don’t do that very often, so it should raise a red flag, so you don’t miss it… 

Good friend, Dennis Miller, sent me this last night that he had found on wolfstreet.com “The $675 million of senior unsecured 30-year bonds that meme-stock darling Bed Bath & Beyond issued in 2014, and that are due in 2044, with a coupon interest of 5.165%, collapsed to a new closing low of 15.8 cents on the dollar today, with some trades being below 15 cents, after having plunged all last week from the meme-stock inspired dead-cat bounce.

That would be a yield to maturity of 33%, assuming that the company pays the interest for the life of the bond and doesn’t default, and at maturity pays off the bond. But with this yield, the bond market is signaling that a default and a bankruptcy filing are imminent, with a massive haircut for unsecured bondholders”

Chuck again… this is just beginning folks for Corporations that took out so many low rate loans that are now having problems because of the debt load, and the Corporation can’t refinance the debt, because the loans would no longer be low rate!  Uh-Oh!

I see said the blind man as he spit into the wind…. It’s all coming back to me now! The zombie corporations that got low rate loans are going to see it all coming back to them soon…  Got Gold?

The U.S. Data Cupboard today has the “flash” prints of US PMI (manufacturing index) for this month… This won’t mean that the whole August PMI is this number, just what it is to date…  And I expect it to weaken once again.  This Data that gets printed today, will probably not take into consideration the awful print we saw in the Empire (NY REGION) region recently… So, to me it’s basically worthless… And I hope the markets don’t pay it any attention!

To recap…  Well, the dollar is on a roll and taking no prisoners, and I just don’t see how this will end without tears… The dollar gained 5 index points yesterday and pushed the euro to a 2-decade low.  Gold & Silver can’t buy a bid these days, as the dollar strength in the currencies, is spilling over to the metals. OPEC warned that they will act if the markets don’t straighten out… Ooooh, you just wait until your father comes home!  

For What It’s Worth.. I had a Daniel Di Martino Booth, article all lined up until I saw this article in Ed Steer’s letter this morning. This is a “made for the movies story” about a Gold heist in Russia… And it can be found here: $13 million gold heist busted at Moscow airport — RT Russia & Former Soviet Union

Or, here’s your snippet: “An international conspiracy to smuggle 225 kilograms of gold worth an estimated 760 billion rubles (roughly $12.7 million) through Moscow was thwarted by sharp-eyed customs agents, the Federal Customs Service (FTS) of Russia announced on Thursday.

The scheme involved two groups of three travelers who swapped suitcases inside Vnukovo Airport. The group, bound for the United Arab Emirates, was caught with a number of gold bars in their bags.

The attempted heist took place on August 11, the FTS said in a statement. According to the customs service, three Armenian nationals smuggled the gold into the airport in their carry-on luggage. Since Armenia is a member of the Eurasian Economic Union, they were not subject to customs controls. Once inside, however, they traded suitcases with a trio of Russian citizens, who had come in with empty baggage. The Russians were en route to Dubai in the UAE.

Customs officers monitoring the airport’s security cameras, however, noticed something strange – three passengers dragging their wheeled suitcases with considerable effort. They began following the trio and saw them swapping bags with the other men, proceeding to the gate for their Yerevan flight with much more spring in their step. The customs inspectors decided to do a spot check on the passengers headed to the UAE, who had already boarded their flight.

“The smugglers with the valuable cargo were detained by Vnukovo customs operatives after boarding their plane,” the FTS said.

After stepping on board and checking the suspects’ bags, customs officers found 45 gold bars, the FTS said in the initial report. None of them had been declared or cleared customs inspection. All had the legally mandated serial numbers and other identification marks. The newspaper Kommersant later reported that the haul amounted to a total of 71 gold bars – 14 ingots of 12kg each and 57 smaller, one-kilo bars. 

Prosecutors said they intend to charge the group with three felonies, including criminal conspiracy and smuggling of goods designated of strategic importance.

A Moscow court ordered the three Armenian nationals jailed until September 11. They were identified as Artak Ayvazyan, Karen Darbinyan and Arman Harutyunyan, officially unemployed. Their attorneys made a motion to keep them under house arrest instead, but the court denied it. The Russian citizens were released pending trial after signing statements that they would not leave Moscow.”

Chuck Again… Whew! That was close! Can’t you see some script writer taking this story and making a movie out of it?  FWIW at its best! 

Market Prices 8/23/2022: American Style: A$ .6875,  kiwi .6176,  C$ .7680, euro .9925, sterling 1.1762, Swiss $1.0344, European Style: rand 17.0725, krone 9.7908, SEK 10.6949,  forint 414.03,  zloty 4.8103,  koruna 24, 8449, RUB 60.10, yen 137.48, sing 1.3961, HKD 7.8473, INR 79.86, China 6.8472, peso 20.07, BRL 5.1684,  BBDXY 1,294.17,  Dollar Index 109.5, Oil $92.01, 10-year 3.01%, Silver $18.96, Platinum $877.00, Palladium $2.014.00, Copper $3.64, and Gold… $1,737.74

That’s it for today…Cardinals and Cubs play 2 today in Chicago… Somewhere in Heaven, Ernie Banks is smiling! I need a new book to read… I like detective novels… And I think I’ve read just about everything that’s out there! A short-n-sweet Pfennig for you this morning, as I just can’t get myself to write about this dollar strength, other than what I’ve said so far… Whenever I hear the song that’s our take us to the finish line song today, I think of a good friend, Laura Baur, for it’s her favorite song… The Scorpions take us to the finish line today, with their song: Still Loving You…  I hope you have a Tom Terrific Tuesday today…  And Please! Be Good To Yourself!

Chuck Butler

 

 

August 22, 2022

* Currencies & metals see major selling late last week

* The Gov’t’s bond servicing costs are soaring higher! 

Good Day… And a Marvelous Monday to you! WOW! What a wonderful weekend here in the Midwest, weather-wise! I don’t recall an August where the temps are moderate, and a lovely breeze blows throughout the day! These are supposed to be the “dog days of summer”, and instead they have been “pleasant puppies”! My beloved Cardinals swept the snakes in Arizona, and now visit Wrigleyville for 5 games in 4 days… That’s tough on a pitching staff, so I’ve got to hope that their newfound depth holds…  The Allman Brothers greet me this morning with their big hit song: Melissa

Well. last week the light bulb over traders heads finally lit up, as they finally figured out that the Fed Heads are going to keep hiking rates, maybe not as aggressively, but hiking them nonetheless, and that brought about a dollar rally to write home about! The last two days of last week, saw the BBDXY rise from 1,273 to 1,286!  The euro is flirting with parity to the dollar once again, after weathering the last storm, the euro doesn’t look like it has the oomph to fight again… 

The currencies, for the most part, have all been taken to the woodshed by the traders, with only the Petrol Currencies holding ground to the dollar. The Russian ruble actually gained VS the dollar and trades this morning with a 59 handle… The Norwegian krone slipped just a bit, along with the Canadian dollar / loonie, while the Brazilian real held steady Eddie… 

The Chinese renminbi has been unable to hold steady, as the rate differential between the dollar and renminbi has widened after last week’s Chinese rate cut.  This rate differential is becoming a real problem for the renminbi and it’s only going to get worse, folks…  And if the renminbi is suffering, the Singapore dollar suffers alongside the renminbi. I’ve explained this relationship plenty of times in the past, so I won’t go down that road today again, other than to say that it’s an export competition thing… 

Gold got sold late last week, and on Friday, lost $11, to close the week at $1,748.60… Silver just keeps getting sold by the bushelful, and lost 46-cents on Friday to close the week at $19.16…  Historically, August is not a good month for the metals, but this August things are getting out of hand, with the selling getting very uncomfortable… Platinum and Palladium also saw major selling late last week, so the selling is not just in Gold & Silver. 

Bonds got sold last week, as that light bulb over traders’ heads got lit… the 10-year’s yield rose to 2.99% to end the week, and in the overnight markets last night it briefly touched 3.03%…  The Price of Oil held steady Eddie into the weekend, and trades this morning with a $90 handle. 

In the overnight markets last night… There’s been more dollar buying and the BBDXY has gained another 2 index point overnight. The euro is basically at parity with the dollar as it trades at 1.0015 this morning. The last time the euro was this low, it was on its way higher, and I was a one man band with the currency trading, and answering the phone… Jen was the one-woman band on the stock side, and our do it all assistant, Cheryl, was a rock… Can you say 1999/ 2000?  Yikes! That seems like ages ago! 

Gold has lost another $12 in the early trading this morning, and Silver has lost another 18-cents to bring it below $19!  Crazy, eh?  All the problems in the world, and they keep mounting, and Gold is getting sold? I’m at wits end here folks… All my beliefs of how markets work, are circling the bowl, every day… UGH! 

OK… Well with everyone in the markets agreeing that the Fed Heads are going to keep hiking rates, and there’ll be no “Powell Pivot”, in the near future, one has to turn their attention to the Fed’s borrowing costs… Those are rising folks, and not by inches, the costs are soaring, and that was before the last 75 Basis Points rate hike was made at the last FOMC meeting. 

The Fed Heads have their work cut out for them, with regards to fighting inflation with rate hikes. They got started way too late, and then they only hiked rates 25 Basis Points. It took a few months before the Fed Heads got serious about fighting inflation, with a 75 Basis Points rate hike (should have been more than 100 Basis Points, but I digress) . So not only are the borrowing costs soaring now, they are going to go cyberspace in the future, and then all hell breaks loose, folks… 

For, the question then begins to be centered around, “Who’s going to buy all those Treasuries, that are used to finance the debt”?  And then the next question for the Gov’t is “what service do we cut, in order to service the bond costs?”  Debt will eventually be our kryptonite folks… 

This Fed Head from Minneapolis, Neal Kashkari, has inserted his foot in his mouth, many times in the past, and just last week, he did it again, check this out from Kashkari: “So the question right now is, can we bring inflation down without triggering a recession? And my answer to that question is: I don’t know,” Kashkari said, during a talk with business leaders in Minneapolis.

He said he didn’t think the economy was in a recession right now.”

Chuck again… Memo to Kashkari, we are in a recession, and you should know better than to fight that fact!  Oh, and just last week, a survey of the large corporations in the U.S. all said that they are going to be laying off large numbers of workers… Hmmm

Reuters reported last week that “Swiss exports of gold to China in July rose to their highest since December 2016, Swiss customs data showed on Thursday, as demand in the world’s largest bullion market improved.

Switzerland shipped 80.1 tonnes of gold worth 4.4 billion Swiss francs ($4.6 billion) to mainland China, up from 32.5 tonnes in June and the second-highest monthly total in figures that stretch back to 2012.

Retail consumers in markets like China often buy less when prices rise and more when they fall. China had also in July emerged from COVID-19 lock-downs earlier in the year.

The surge in shipments to China lifted Switzerland’s total gold exports to 186.2 tonnes in July, again the most since 2016.

Switzerland is the biggest refining and transit hub for gold and its data offer insight into global market trends.”

Chuck again, and it wasn’t only China that was receiving record amounts of physical Gold from Switzerland. India also was on the list of countries receiving record amounts of physical Gold… 

So… we’ve come a long way from the edge of the cliff that we peeked over early in July… The Bank of Japan (BOJ) was the first to make it clearly understood that they are not going to step away from their current Monetary Policy of negative rates and bond buying.  And the Fed Heads were sending so many confusing signals no one knew what to expect next from the Fed Heads…  And once again, the markets stepped back away from the edge of the cliff… Apparently, they didn’t like what they saw when they peeked over the edge… I don’t think anyone would like what they saw there either! 

Now, we’ve moved sufficiently away from the edge of the cliff, only to be revisited at a future date, and the risk off trading has been thrown out with the bath water… The dollar is flexing its muscles once again, and everything that isn’t dollars gets taken to the woodshed… 

Last week’s U.S. Data Cupboard was a mixed bag-o-nuts… Industrial Production and Capacity Utilization surprised with increases, but Retail Sales were flat as a pancake (head East), and Leading Indicators were negative… All in, I would say that the Data Cupboard, last week, was a disappointment. 

This week’s Data Cupboard is sporadic with data prints that move the markets, and we’ll see the first one on Wednesday, and then we’ll have to wait for Friday when Personal Income and Spending will print. Bad data prints have had the opposite effect on the dollar, than in the past… I’m just saying… 

To recap… The dollar traders have finally gotten the memo that the Fed Heads are going to keep hiking rates, and the buying of the dollar has gone hog wild… the BBDXY has gained 15 index points since last Thursday morning, and the euro has reached parity with the dollar this morning. The Fed’s borrowing costs are soaring folks… And that is not going to stop any time soon, so what service is going to be cut to serice the bonds? 

For What It’s Worth… In a recent interview I did with good friend, Dennis Miller, we discussed what kind of recession this is that we’re in, and that discussion can be found here: What Kind Of Recession Is This? – Miller on the Money

Or, here’s your snippet: “DENNIS: Chuck, once again, thanks for your time in helping educate our readers. In my recent column, What is normal? I pointed out in a normal economy, interest rates for both lenders and borrowers are above the inflation rate. Today – not even close!

Technically we are in a recession, but we are seeing “Help Wanted” signs everywhere.

Chuck, you analyze each week’s unemployment reports, what are they telling you about what is happening in the labor market?

CHUCK: It’s a crazy mixed-up world we live in these days, Dennis. Just last week we saw the Bureau of Labor statistics (BLS) print a 528,000 jobs created number for July…. But looking under the hood, I found that 340,000 of those jobs were created out of thin air by the BLS (they made up the number). That leaves only 128,000 real jobs created in July, and that would look like it should.

Each Month the BLS reports that 4.3 million people quit their jobs. I find this to be quite telling of the labor markets these days.

The pandemic, and subsequent economic shut down, has created a country of people that won’t work for minimum wage, won’t work long hours, and won’t work in an office, or restaurant, or retail store, etc.

That’s why you see so many HELP WANTED signs, people just don’t want to work any longer.

The Weekly Initial Jobless Claims have been ratcheting up in recent weeks and is beginning to look like it will explode higher very soon.

So, to sum it all up…. The employment situation in this country isn’t as rosy as the BLS or the Gov’t want us to believe it is. And all signs point toward very weak employment, during this recession that we are in.”

Chuck again…  Yes, it is a crazy mixed-up world of markets right now, and it takes a lot of gray matter to keep up with them and understand what the heck is going on… I give it my best effort, the old college try if you will, and in these interviews, I do with Dennis Miller, he gives me tough questions to answer. He puts me through the gauntlet! I hope you have a chance to go to his website and read the full interview… 

Market Prices 8/22/2022: American Style: A$ .6918, kiwi .6206,  C$ .7702, euro 1.0015, sterling 1.1813, Swiss $1.0426, European Style: rand 17.0402, krone 9.7838, SEK 10.6573,  forint 405.74,  zloty 4.7446,  koruna 24.6174, RUB 59.82, yen 136.78, sing 1.3848, HKD 7.8457, INR 79.56, China 6.8384, peso 20.19, BRL 5.1695,  BBDXY 1,288.06, Dollar Index 108.29,  Oil $90.00, 10-year 2.99%, Silver $18.98, Platinum 886.00, Palladium $2,053.00, Copper $3.62, and Gold… $1,736.43

That’s it for today… The Butler family celebrated daughter Dawn’s birthday yesterday, a grand time was had by all (I think!) I put the Green Big Egg through the paces, and we had some scrumptious smoked turkey for dinner! I cut eating any bread out of my diet last week, and it paid off, I don’t think I can do that all the time, but every now and then it’s ok… At my age, and physical limitations, I find it very difficult to lose any more weight than I already have…  In fact, I’ve been at the same weight now for a couple of months… UGH!  Heartsfield takes us to the finish line today with their great song: Pass Me By… I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

August 18, 2022

* currencies & Metals don’t get ambused last night! 

* Retail Sales were flat, so what are consumers spending money on now? 

Good Day… And a Tub Thumpin’ Thursday to you! I probably had the most to eat at a sitting in a couple of years, last night, as we took the grandkids to a Mexican restaurant for dinner. The kids love chips and salsa, so we let them go at them! Little Evie even got into eating chips and salsa… Everett was the only grandkid that couldn’t make it, as he had football practice. My darling granddaughter, Delaney, (I call her little d) is starting high school in a week, and she’s all excited about that. Yes, it’s been 15 years since she was born… YIKES! My beloved Cardinals won again last night VS the Rockies, and the Cards and Rockies go at again today, in a day game… I couldn’t find anyone that wanted to go to the game with me, so… I’ll sit out back and watch the game at home… R.E.M. greets me this morning with their mega hit song: Losing My Religion

Well… for the second day in a row, the dollar didn’t gain anything during the U.S. session, but gains a bushelful in the overnight markets… Yesterday, the dollar was stuck in the mud, and the BBDXY lost 1 index point. So, that meant that before the trading books were handed over to the Asian and then the European traders, the currencies traded in the same clothes that they had on all day… Gold & Silver got smacked around, and suffered large losses yesterday… Gold lost $14, and closed at $1,762.60, and Silver lost 38-cents, to close at $19.88… Gold & Silver started the day in the dumps, and never recovered, and before you knew it the day came to a close and they had worse losses than they started the day with!

It’s all about this mantra that “inflation has peaked”… or “peak inflation”… I’ve told you that I just don’t see it playing out that way, that July’s drop in inflation, was just a blip on the record books… August might also reflect a narrowing in inflation continuing, but then watch out! You know, I was always taught when I came on the trading desk, that traders are always looking ahead, and they trade based on what they see ahead… So, apparently, traders these days, are thinking that inflation has peaked… Because that’s how their trading…

The price of Oil gained $2 yesterday, and closed the day trading with a $88 handle. And Bonds were bought bringing the 10-year’s yield down to 2.87% at the end of the day…

In The overnight markets last night… there was no ambush last night as there was the previous two nights. The BBDXY gained 1 index point overnight, and the currencies appear to be stuck in a rut this morning. Gold is up $7 in the early trading this morning, and Silver is down 4-cents, so a mixed bag of results so far for the metals this morning. 

The price of Oil gained a buck overnight, and trades this morning with a $89 handle.  This Oil pricing is really getting to me folks… Up, down, up , down, and then sideways and upside down!  Is there lack of demand or there isn’t lack of demand, someone please make a decision and trade from it, please? 

I would have thought that with the price of gas falling, that consumers would have more dollars in their respective pockets to spend on other things, but from the looks of Retail Sales in July, that wasn’t the case, and that leads me to believe that consumers have just taken a blow to the midsection, and are still reeling from that blow… And will they come back to the stores once the sting of the blow abates?  In other words, will they forget the pain? I’m thinking that they will, but then the wolf is always at the door, folks, and other things might cause another round of blows to the midsection.. 

Like the pricing of food…  for instance, last month food prices were up 1.1%.. and just a look at some of the items, eggs were up 4.3%, and other things like shelter was up .5%… So, what I’m saying here is that there are other things to spend one’s money on that are basic needs… 

Yesterday was one of those “no where to run, no place to hide days” in the markets… Stocks were down, bonds were down, currencies were down, metals were down, and it was just plain ugly anywhere you looked yesterday… (The price of Oil was up marginally throughout the day yesterday) Was it the disappointing July Retail Sales that brought about all this selling yesterday? Retail Sales for July were flat as a pancake( Head East ), and when you take out food and energy, as if we could actually do that in practice not just on paper, Real Retail Sales were up just 0.01%… So, the BHI was bang on once again…

Well, maybe in stocks and bonds, but as far as the currencies are concerned, it should be been a watershed report for them, as this report would indicate that the economy is slowing, and that could sway the Fed Heads in the amount of a rate hike they want to announce in September…And the metals should have never been on the chopping block yesterday, or any day before it for that matter!

The Fed Heads FOMC Meeting Minutes were out yesterday and they sure painted a different picture than what the markets are trading on… I found this on CNBC this morning: “Federal Reserve officials at their July meeting indicated they likely would not consider pulling back on interest rate hikes until inflation came down substantially, according to minutes from the session released Wednesday.

During a meeting in which the central bank approved a 0.75 percentage point rate hike, policymakers expressed resolve to bring down inflation that is running well above the Fed’s desired 2% level.

They did not provide specific guidance for future increases and said they would be watching data closely before making that decision. Market pricing is for a half-point rate hike at the September meeting, though that remains a close call.”

Chuck again… Well doesn’t that just take the cake? The Fed Heads spell out what they are thinking, and the markets trade as if they don’t believe them… Hmmm… I know, I know, I wouldn’t believe them either, but there’s an old saying about not fighting the Fed…

In an article I found on Bloomberg yesterday, the secrets of JP Morgan’s Metals Trading came to everyone’s attention… Check this out from Bloomberg.com “The trial of JPMorgan Chase & Co.’s former head of precious metals has offered unprecedented insights into the trading desk that dominates the global gold market. 

The proceedings have already shone a new light on the inner workings of the business, from its profitability and market share to its largest clients.

In summary: the business is a consistent moneymaker for JPMorgan, notching up annual profits between $109 million and $234 million a year between 2008 and 2018. The lion’s share of that comes from trading in financial markets, but the bank does plenty of physical business as well. Trading and transporting physical precious metals makes the bank about $30 million a year on average.

Still, the profits disclosed in the trial have been overshadowed more recently: in 2020, JPMorgan made $1 billion in precious metals as the pandemic created unprecedented arbitrage opportunities, according to people familiar with the matter.”

Chuck again… I have no problem with a business making profits that seem out of the ordinary, as long as they aren’t cheating the customers or the markets, doing fraudulent things, and underhanded dealings… 

We’ll see the usual fare for a Tub Thumpin’ Thursday today with the printing of the latest Weekly Initial Jobless Claims… these reports have shown a marked increase in the number of claims in recent weeks, which contradicts the BLS trumped up jobs creation report…  We’ll also see the leading indicators which last month printed negative…  And finally Fed Minnesnowta, Neal Kashkari will be speaking, and as has been his habit of opening mouth and inserting foot, I’ll be interested to see if he decides to keep his trap shut…  

My dad taught me that it is far better to allow people to think you are a fool , than to open your mouth and remove all doubt…. 

To recap…  The currencies and metals didn’t get ambushed last night, and that’s a good thing. Gold is up $7 early this morning, so we have that going for us! Chuck talks about all kinds of things this morning, so if you passed over something, go back and read it again! HA! 

For What It’s Worth… I’ve said this before, but I really like Matthew Piepenburg’s writing for Swiss America… His latest article was picked up by the Dollar Collapse web site, and it’s here that I’ll send you to find Matthew’s article title: Modern American Policy: Stupid or Sinister? And that article can be found here: Matthew Piepenburg: Modern American Policy: Stupid or Sinister? – DollarCollapse.com

Or, here’s your snippet: “American policy has been acting in ways which suggest either a desperate ignorance or a sinister restructuring of the national narrative.

Surveying the Senseless

The USA is now staring down the barrel of four-decade high inflation, an inverted yield curve and the highest debt levels in its history as Wall Street recently enjoyed the strongest relief rally since 2020 on the bad news of yet another Fed rate hike (75bp) into a percolating liquidity crisis.

Huh?

In a Fed-led dystopia marked by years of printed rather than earned liquidity, bad news is now good news to markets who nervously seek pretexts for central bank stimulus rather than actual earnings or GDP.

In such distorted landscapes, positive jobs data creates sell offs and crippling rate hikes induce rising stocks.

For almost 2 years, while we and other candid market observers were warning of crippling inflation, our central bankers were describing it as “transitory” with a dishonesty similar to the current recession is not a recession meme.

Huh?

Meanwhile in DC, we see growing signs of a political culture less about public service and more about self-service.

Wealth disparity in the home of the brave has passed the highest levels ever recorded and points directly to the slow and empirical death of the American middle class.”

Chuck… oh, the article is longer as Matthew goes through more steps that just make U.S. policy questionable, so take the time to do to the website provided above, and read the whole article…

Market Prices 8/18/2022: American Style: A$ .6957,  kiwi .6287,  C$ .7758, euro 1.0167, sterling 1.2062, Swiss $1.0489, European Style: rand 16.7130, krone 9.6616, SEK 10.4048,  forint 397.75,  zloty 4.6459,  koruna 24, 1767, RUB 60.13, yen 135.20, sing 1.3816, HKD 7.8448, INR 79.68, China 6.7903, peso 19.98, BRL 5.1662,  BBDXY 1,272.98,  Dollar Index 106.69, Oil $89.31, 10-year 2.88%, Silver $19.84, Platinum $930.00, Palladium $2,176.00, Copper $3.63, and Gold… $1,769.95

That’s it for today, and this week of course… Saturday will be my darling daughter Dawn’s Birthday… I won’t tell you how old she will be, that wouldn’t be nice of me. But it doesn’t matter, because she doesn’t appear to be that age… She’s tiny, and petite and built just like my grandma… She is still a kindergarten teacher in the school district that she grew up in. So Happy Birthday Boo! When Dawn was a little girl, about 2 or 3, I started calling her Boo Boo (Yogi’s bear partner) and she still has an uncle that refers to her as “the Boo”… Cardinals won last night 5-1, so no dramatics like the night before… The Cards go for the sweep today… Journey takes us to the finish line today, with my fave song from them titled: The Girl Can’t Help It… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and that you don’t forget to Be Good To Yourself!

Chuck Butler

 

 

August 17, 2022

* RBNZ hikes their OCR to 3%

* Russia to build a competitor to the LBMA… 

Good day… And a Wonderful Wednesday to you! Temps in the 70’s in the middle of August? That’s what we had last night, as neighbor friends, Duane, Mike, and Paul, all joined me outside to watch the Cardinals beat the Rockies 5-4. The game was closer than it needed to be, but for one bad inning by our starter. And I’m sorry if I offend this man, but if I were a major league batter and a pitcher named “packy” came in the game to face me, I would be fearless! I’m just saying… I’ve been thinking lately, that I need to go on an extended vacation, one where the currencies and metal could rally to their little hearts’ desire… But, I decided against that idea of an extended vacation… We’ll just have to suffer through the trials and tribulations of the dollar together… Paul McCartney greets me this morning with his song: Every Night..

Well, the dollar buying ended yesterday, and I suspect the PPT decided that they had done enough… I’m serious here about this… The dollar gets sold, once again, just like last week before the PPT entered the markets and propped up the dollar. The BBDXY lost 4 index points yesterday, and closed the day at 1,262.80… When will the Gov’t allow the dollar to trade without interference? In past trends whether they be strong dollar or weak dollar trends, the dollar floated freely dependent on fundamentals… These days, there are no trends to speak of, because every time the dollar begins to falter, and look like it’s read to do a Thelma and Louise, the PPT steps in and throws the dollar a life saver… (Cherry I hope, that’s my favorite flavor)

As I mentioned, on Monday, the Reserve Bank of New Zealand (RBNZ) met yesterday, and hiked their Official Cash Rate (OCE) 50 Basis Points to 3.00%… That still a long ways from equaling the inflation rate in New Zealand, but giving fundamentals a nod, kiwi rallied yesterday, while the Aussie dollar (A$) fell…I’m sure that kiwi would have sold off along with the A$, had it not been for the rate hike… And in the overnight markets kiwi did just that, get sold off, and lose all of its gains from the rate hike… UGH! 

Gold & Silver spent the day trying to overcome the early morning selling, but failed miserably at doing so, with Gold losing $4.50, on the day to close at $1,7776.60, and Silver losing 12-cents to close at $20.25… You know what I think? I think that I’m ok with the price manipulators putting a cap on Gold at $1,800… When I bought my first Gold in 2005, I paid $600 for it… So, a price of $1,800 is quite nice as far as I’m concerned, but for others that bought it later well, this cap at $1,800 had really put a damper on things…

The pogo stick that the price of Oil is attached to, went down yesterday, and by a lot! The price of Oil ended the day trading with a $87 handle… Oil traders just can’t seem to make up their minds about the direction of the price of Oil… As I said yesterday, we’re waiting on the next OPEC meeting where they will discuss keeping production at current levels, or narrowing it, due to lack of demand…

Bonds traded sideways on Tuesday, not getting bought or sold, and the yield on the 10-year traded at 2.82% all day…

In The Overnight markets last night… the currencies & metals got ambushed once again overnight… the dollar is getting bought overseas like funnel cakes at a State Fair! The dollar has pushed the currencies back to the levels they were a week ago, with the euro leading the currencies down. The BBDXY, gained 4 index points and sits this morning at 1,273…  The Aussie dollar (A$) has lost all of its gains from late last week and looks very sickly again. 

Gold & Silver are getting sold this morning too, with Gold down $9 to start the day, and Silver down 27-cents, which brings Silver back below the $20 figure. From everything I read, and put together in my mind, is that the markets have forgotten about a Fed pivot and are now convinced that the Fed will continue with its aggressive rate hikes.  

These traders are not going to let the fact that the U.S. rates might be rising, but they are still a long way from equaling inflation… To me, that would be a BIG consideration, when valuing a currency, but then, that’s just me… You know the guy that thinks logically… 

The price of Oil is stuck on the downside of the pogo stick its been riding for some time now, and Oil is trading this morning with a $86 handle… I’m amazed that our friends (NOT!) at OPEC, haven’t announce a production cut to even out the price… Maybe it’s still coming, but I have to wonder, when the hell they are going to do it? 

And Bonds, are the picture that is illustrating the change of trader’s minds on the Fed Pivot, as the yield of the 10-year rose to 2.89% in the past 24 hours. 

Yesterday, the good folks at GATA reported that : “A new international standard for the precious metals market, the Moscow World Standard (MWS), should be created to become an alternative to the standard of the London Bullion Market Association (LBMA), the Russian Finance Ministry said.

A letter from the Ministry of Finance to industry participants says that “an independent international infrastructure” is needed to “normalize the functioning of the precious metals industry.”
According to the department, it is critically necessary to create it, RIA Novosti reports.”

Chuck again… The Ministry of Finance wants to make membership in this organization attractive to all foreign market participants, especially China, India, and Venezuela, Peru, and other countries of South America, as well as Africa. The agency expects that such a move will quickly break the LBMA monopoly and ensure the stable development of the industry… I hope it does… I really do, for too long the LBMA has allowed all the foolishness and shenanigans in trading and setting prices, so in my mind, they deserve to have their monopoly broken apart!

Ok, I have something for you from Bill Bonner, who took the first part from Bloomberg; “Dr. Doom’ Roubini Sees Either US Hard Landing or Uncontrolled Inflation
“The fed funds rate should be going well above 4% – 4.5%-5% in my view – to really push inflation towards 2%,” the chairman and chief executive officer of Roubini Macro Associates said in an interview on Bloomberg Television.”

That’s it. Those are the choices. Inflate the bubble. Or let it die.

Roubini says he thinks hopes for a Fed “pivot” – from tightening to loosening – is “delusional.”

In the near term, he is certainly right. Fed governors are not stupid… at least, not in a conventional way. It took many years of study to become the simpletons they are.

And they are still human! Let’s not forget; they don’t like people laughing at them behind their backs any more than anyone else. And now, everyone can see that they made a huge mistake by not raising interest rates sooner. Then, they made another huge mistake by not recognizing the threat of inflation sooner… and still another big mistake by believing it would go away like a summer shower.

Instead, inflation has settled in… and has been drenching consumers for more than a year.”

While I tend to side with Mr. Roubini on this, I have this caveat… What if the Fed Heads think that inflation has peaked, and they don’t need to hike rates any longer? Was July’s dip of the inflation rate, a trend, or just a blip on the screen? I guess we’ll have to wait-n-see when this all comes to pass next month, eh?

OK… onto other things… I saw this on CNBC.com yesterday, and thought it was worth mentioning… “The National Association of Home Builders/Wells Fargo Housing Market Index dropped 6 points to 49 this month, its eighth straight monthly decline. Anything above 50 is considered positive. The index has not been in negative territory since a very brief plunge at the start of the Covid pandemic. Before that, it hadn’t been negative since June 2014.

“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said NAHB Chief Economist Robert Dietz.

Of the index’s three components, current sales conditions dropped 7 points to 57, sales expectations in the next six months fell 2 points to 47 and buyer traffic fell 5 points to 32.

Despite higher costs for land, labor and materials, about 1 in 5 builders in August reported lowering prices in the past month in an effort to increase sales or limit cancellations. The average drop reported was 5%.”

Chuck again, I doubt that many would consider a drop of 3% to be a real mover and shaker, but it could be the beginning of a long trend in housing… And I can’t say that I believe it won’t happen!

Because… While I’m still of the belief that the Fed Heads are thinking that they are nearing the end of their rate hikes, it doesn’t mean that they won’t still hike rates in coming months, and as rates ho higher, home prices go lower… It’s a simple fact, Jack!

Well, circling back to the currencies… They’ve been dragged through the mud for months, years, maybe even a decade now, and it just doesn’t see it will ever be their turn to rally VS the dollar… Well, if they the respective countries of these currencies, had been prudent and not followed the Fed down the road to hell and high water, they would be in a better position to rally VS the dollar… But as it is, they are not in any position to rally VS the dollar, at the moment… That moment could change in a NY minute, but for now the moment is dollar strength…

In the old days… I would look at a country like New Zealand, and their 3% OCR, and compare it to the U.S. and their 2.5% FFR, and say, that kiwi should be rallying VS the dollar… An investor could earn 50 Basis Points more on their deposits in kiwi than dollars… That’s how we traded currencies back in the day… But no longer, because a country could have 200 Basis Points advantage VS the dollar, and trader sentiment would decide which currency got bought… I have to say that I’m glad that I’m no longer a trader trying to pick out currencies that investors should buy…

The U.S. Data Cupboard yesterday, had Industrial Production, which showed an increase in Factory production in July… Hmmm… Capacity Utilization also increased, which is good sign for Corporations in my humble opinion… 

Today’s Data Cupboard has the July Retail Sales for our viewing pleasures… I told you on Monday, that the Butler Household Index  (the BHI) wasn’t indicating that Retails Sales will be strong… So, we’ll find out if the BHI was correct or not in a bit this morning. 

To recap… The dollar got sold in the U.S. session yesterday, but in the overnight markets the currencies got ambushed yet again..  These overnight sessions for the dollar has been a bonanza!  The RBNZ did hike rates yesterday to bring their OCR to 3%, but the boost that kiwi got from the rate hike was all gone in the overnight markets last night.  Russia is forming a competitor to the LBMA (London bullion exchange) this ought to be very interesting, as my spider sense is tingling… 

For What It’s Worth…  There’s not a lot out there this morning, so I had to settle for this article on Housing, which doesn’t excite me any, but it is FWIW worthy, and it can be found here: Record Number Of Homebuyers Walk Away From Contracts As Builders Reel Amid Glut Of Unsold Houses | ZeroHedge

Or, here’s your snippet: “Record Number of Home Buyers Walk Away From Contracts as Builders Reel Amid Glut of Unsold Houses

Between cratering home builder and homer buyer confidence…record low home affordability…

… a record number of new listing with price cuts (amid the collapse in demand).

… plunging housing starts…

… and so on, as the recent surge in mortgage rates has effectively pushed the housing market into a recession, which is now so widespread that 63,000 home-purchase agreements were called off in July, equal to 16% of homes that went under contract that month. According to Redfin, that’s the highest percentage on record, and only the brief spike during the covid crash – which the promptly reversed – was worse. It’s up from a revised rate of 15% one month earlier and 12.5% one year earlier. Click to enlarge.

The housing market is slowing as higher mortgage rates sideline many prospective home buyers. With competition declining, the house hunters who are still in the market are enjoying newfound bargaining power, a striking contrast from just a few months ago, when buyers often had to pull out every stop in order to win. Today’s buyers are more likely to utilize contract contingencies that allow them to back out without financial penalty if something goes wrong. And with an increasing number of homes to choose from, they’re also more likely to call a deal off if a seller refuses to bring the price down or make requested repairs—a situation that has become increasingly common given that sellers are still adjusting to the cooling market.”

Chuck Again…  I remember telling you before the Fed started their rate hikes, that if the Fed carried through with their plans that they would squash the Housing Bubble… Maybe that’s coming to a theater near you! 

Market Prices 8/17/2022: American Style: A$ .6945,  kiwi .6291,  C$ .7750, euro 1.0161, sterling 1.2083, Swiss $1.0500, European Style: rand 16.6127, krone 9.7042, SEK 10.3985,  forint 397.95,  zloty 4.6261,  koruna 24.1543, RUB 60.52, yen 135.07, sing 1.3825, HKD 7.8415, INR 79.44, China 6.77792, peso 20.03, BRL 5.1473,  BBDXY 1,273.09, Dollar Index 106.60,  Oil $86.33, 10-year 2.89%, Silver $19.52, Platinum $927.00, Palladium $2,132.00, Copper $3.62, and Gold… $1,767.92

That’s it for today… After my journey around the country with the band I played in during the summer of 1973, I hooked up with a guy that was a blues guitarist, and we jammed together for hours. The reason I bring this up now, is that the Allman Brothers song: In Memory of Elizabeth Reed, is playing, and that’s one of the songs we used to play together…  That’ll be our song for the finish line today… I hope you have a Wonderful Wednesday today, and please remember to Be Good To Yourself!

Chuck Butler

 

 

August 16, 2022

* dollar continues to push higher vs the currencies and metals

* Price manipulators aren’t scared of the law… 

Good day… And a Tom Terrific Tuesday to you! A beautiful day here in my river town, with a light breeze blowing as good friends, Duane and Mike sat outside . with me, and enjoyed the evening! No baseball for me last night, UGH, but my night wasn’t wasted! I got a call from a former colleague, at Mark Twain Bank, and EverBank. Ann Hopkins called me and we had a great conversation for an hour! We made plans to meet later this week! I’m so excited to see her again! I’m always free to meet my former colleagues whenever they decide they want to see me again! Paul McCartney and Wings greet me this morning with their song: Band On The Run…

Well, the PPT must have made a strong impression on traders in the overnight markets the night before, and the dollar continued to gain yesterday albeit at a slower pace than in the previous nights trading. The BBDXY gained 1 index point yesterday, but the pressure on the currencies remained in tact, and there’s going to have to be something happen to change this direction that the dollar is heading right now. And even then, I question if the dollar will be knocked off it pedestal right now… The pundits all are claiming that China’s reported slowdown (they cut rates) is the cause of the dollar strength right now, but I say that’s hogwash! The dollar was brought out of its doldrums by the PPT, and it will take a few days for the fear of more PPT intervention before the currencies and metals get back on the rally tracks…

Gold lost $23.90 yesterday, thus wiping out most of its gains the last week. Silver lost 60-cents and it also lost most of its gains last week. Gold close the day at $1,781.10, and Silver closed at $20.37… I shake my head in disgust over the way the metals were traded yesterday… What on earth had changed in the world, from last Friday, when it appeared that Gold & Silver were on their ways to higher ground? Oh, China cut their interest rate, but isn’t that a reason to buy the metals? The PPT really did a number on the currencies and metals, and I have nothing more to say about that!

In my opinion, the 10-year Treasury’s yield has been lower than it was a month ago, and yesterday the yield dropped 5 basis points to 2.78%, so what’s the allure of the dollar? I’m just saying… The price of Oil bumped higher to an $88 handle yesterday, but that’s small potatoes, and I doubt that the price of Oil will remain so low, given that OPEC is about to meet and discuss production… It’s my view that our friends at OPEC (NOT!) will see the lack of demand and cut production, which should turn the price of Oil around once again..

In the overnight markets… there was more dollar buying, and the currencies all look sickly once again. The BBDXY gained 5 index points overnight, and the euro has fallen below the 1.02 figure once again. The Aussie dollar, which at the close of last week, looked unbeatable, is staggering after taking a shot from the dollar in the midsection…  I saw a headline on an article that said” The dollar reigns amid fears of a slowdown”…  Yeah, it’s like that and it has me turned inside out, and upside down! 

Gold starts today down $5 and Silver starts the day down 17-cents… All the metals have been subjected to price manipulation, and management of the metals… That’s Gold, Silver, Copper, Platinum, Palladium, all getting managed by the price manipulators… I would have thought that seeing the leader of the biggest casino bank, JP Morgan, get caught red=handed price manipulating Gold, that it might put the kyboshes on price manipulation, at least until this all cools down, but nooooooooo!  

The price of Oil continues to act like a kid on a pogo stick, up and down, up and down, with today it being an up day, with the price trading with a $90 handle.  Bonds are steady Eddie, with the 10-year yielding 2.80% this morning… 

Yesterday, a long time reader, Bob. Sent me a link, that I’ll share with you, to a walk around tour that took place in Boston.. Yes, Boston in the U.S.A. The next time someone in the Gov’t says the U.S. economy is strong, tell them to look at this: Streets of Boston, Mass Ave, Albany Street and Southampton Street Documentary August 03, 2022 – YouTube

I do not like to have to include videos like that to make my point, but when it come to push and shove, I’ll do it because… I want people to see what the real America is like, when you don’t have millions in savings… C’mon watch it, it’s only 6 minutes long!

OK, now that your thoroughly depressed… Speaking of being depressed, I burned my finger on a pan of bacon I was taking out the oven last night… Darn, that hurts! I applied ice to it immediately, but I’m sure it’s going to bother me for days… So… how was that for a diversion away from the depressing video? My old PR guy, would be happy as a lark, right now!

Yesterday in Dave Gonigam’s 5 Minute Forecast, he highlighted some of James Rickards thoughts on Gold, so here’s Rickards in the 5 Minute Forecast: “While the Federal Reserve is scrambling to raise short-term rates — the rates they have control over — longer-term rates are climbing down. The yield on a 10-year Treasury note peaked in mid-June at 3.48%. As we write this morning, it’s 2.77%. That drop is confirmation “that the economy is slowing down and rates are in a downward trend,” says Jim.

Too, the yield on the 2-year T-note remains higher than the 10-year at 3.2%. That’s an unnatural condition known as an “inverted yield curve,” almost always a precursor to recession.

“This combination of declining yields and an inverted yield curve signaling even lower rates in the future is an impetus for higher gold prices,” Jim says. “Gold competes with Treasury notes and stocks for investor allocations. When rates are coming down and stocks are on a downward trend also, that’s a tailwind for the dollar price of gold.”

Chuck again… and to that note… the yield on the 10-year fell more yesterday, down to 2.78% from Monday morning when it was 2.82%…

Well, what have we here? I found this on Reuters last night, and copied it so I could include it in today’s letter… I’ll let you read this without comment up front: “Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic.

Most U.S. and European banks had pulled back from the market in June after the Treasury Department banned U.S. investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.

Following subsequent guidelines from the Treasury in July that allowed U.S. holders to wind down their positions, the largest Wall Street firms have cautiously returned to the market for Russian government and corporate bonds, according to emails, client notes and other communications from six banks as well as interviews with the sources.”

Chuck again, does that sound like a weakening of the sanctions on Russia? It sure does to me…

The U.S. Data Cupboard has the July prints of Industrial Production, and Capacity Utilization for us today… I’m not expecting any great shakes from these two prints… Yesterday the NY Empire regional Manufacturing Index lost 31.3 points last month! This is a pulse of the manufacturing in the NY state area, and it was down 31 points last month! That can’t be good, folks…

To recap… Sunday night into Monday morning’s rout on the currencies and metals didn’t let up on Monday, albeit at a much slower pace. The BBDXY gained 7 points overnight and 1 more during the day yesterday. Gold & Silver got the $%$# kicked out them yesterday, giving back most of their gains from last week. Chuck is at a loss in regards to why the dollar rallied so strongly, unless the PPT is the answer…

Before we head to the Big Finish today, I want to talk about how on this day in 1969, the rock festival known as Woodstock, got under way… this was the greatest rock festival of our time, and as a young musician, at the time, I so wanted to be there. But the state of NY was so far from St. Louis Mo, that it was impossible for me to do so. The movie that was made from the festival, became famous, and got played at the Butler house over and over again. Long ago, at Mark Twain Bank, I ran the operations of the Bond Dept, and when a new hire would start, I would hand them the VHS of the movie Woodstock, and tell them they needed to watch the movie before coming back to work. I’m sure that wouldn’t be allowed in today’s environment, because I’m sure I would hurt someone’s feelings! Nevertheless, today marks the observance of Woodstock, August 16, 1969… I still get chills when I see the Alvin Lee and 10 years after performance, and Sly Stone…

For What It’s Worth… This is an interesting article that I found on Bloomberg.com, that talks about alternative currencies taking the place of the dollar in the Russian Wealth Fund, and it can be found here: Yuan, Rupee, Lira May Replace Dollar, Euro in Russia Wealth Fund – Bloomberg

Or, here’s your snippet: “Russia is considering purchases of China’s yuan, India’s rupee and Turkey’s lira for its wealth fund under a budget mechanism that uses excess income from energy sales.

The central bank disclosed a possible mix of currencies for the first time in a report on the policy outlook for the next three years on Friday. It said others can also be included, without giving more specifics.

“A considerable amount of investments” from the Wellbeing Fund will also go into domestic projects from 2022-2025 since they are necessary to help the economy adapt to changed circumstances as a result of sanctions, according to the report.

With euro and dollar purchases blocked by international sanctions over Russia’s war in Ukraine, Finance Minister Anton Siluanov has previously indicated that Russia may turn to other currencies to top up the Wellbeing Fund and possibly invest in the yuan as it expands trade with Asia.

Bank of Russia Governor Elvira Nabiullina has warned against using volatile currencies, while supporting a return to saving windfall income from oil and gas sales. The central bank had earlier urged the government to order state companies to convert their foreign-exchange holdings into the currencies of the nations that haven’t joined in sanctions against Russia.”

Chuck again… Remember what a boost it was to the Chinese renminbi to be included in the Special Drawing Rights? Well, if the Russian Central Bank goes ahead with these changes it could be a big boost to the currencies above…

Market Prices 8/16/2022: American Style A$ .7005,  kiwi .6327,  C$ .7746, euro 1.0124, sterling 1.2020, Swiss $1.0521, European Style: rand 16.4366, krone 9.7255, SEK 10.4048,  forint 400.30,  zloty 4.6405,  koruna 24.2381, RUB 61.32, yen 134.40, sing 1.3804, HKD 7.8415, INR 79.39, China 6.7884, peso 19.90, BRL 5.0965,  BBDXY 1,272.56,  Dollar Index 106.53, Oil $90.18, 10-year 2.80%, Silver $20.11, Platinum $931.00, Palladium $2,129.00, Copper 3.59, and Gold… $1,776.52

That’s it for today… I got chased from the backyard yesterday, when grandson Everett showed up with a few of his friends to swim… I went inside, and twiddled my thumbs, wondering what could I do? I finally texted my good friend, Duane, and asked him if he was doing anything exciting? No was his answer, so we decided to do nothing together! HA! My beloved Cardinals get back on the field tonight for the first of 3 games with the Rockies… We need to turn the table on the Rockies, who took 2 of 3 from us in Denver last week. The Butler Labor Day BBQ & Pool Party is back on for this year! We had to take two years off because of Covid, but as far as I’m concerned that’s history! And that means I’ll be putting the Big Green Egg to work all weekend leading up to the party! I’m so excited that we’ll be hosting this event once again, and hopefully for years to come without breaks! The Guess Who takes us to the finish line today with their song: Share The Land… “Maybe I’ll be there to take your hand, maybe I’ll be there to share the land that they’ll be giving away, when we don’t’ live together”… yeah that song… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

August 15, 2022

* Currencies & metals close the week on an up note.

* The difference between “no inflation”, and “real inflation”

Good Day… And a Marvelous Monday to you! What a wonderful weekend, weather-wise here in my little river town. These are not the dog days of summer that I recall as a youth! And today, August 15, would have been the day we began 2 a-day football practice…But that was 50 years ago Chuck, why do you still recall that? Those practices were burned into my memory bank many years ago that why! Went to see my darling granddaughter, Delaney Grace, in a musical play yesterday and she did a great job in their version of Bonnie & Clyde… She’s become such a strong voice when singing, and man can she dance! Delaney and her family visited NYC this summer, I’m sure she visions herself on Broadway someday… Doucette greets me this morning with his song: Mama Let Him Play… (some very good guitar work in this song)

Well, the dollar selling ended on Thursday last week, and on Friday, the dollar just wallowed around in the mud all day with all the other pigs… The BBDXY gained 1 index point on Thursday and Friday combined, so you can see that there wasn’t much movement in the currencies. The euro did slip from the 1.0334 it traded at on Thursday morning, but the Aussie & kiwi dollars each gained on both days.

Speaking of kiwi, the Reserve Bank of New Zealand will meet tomorrow (The 17th for them) and I fully expect the RBNZ to hike rates another 50 Basis Points brining their OCR (official cash rate) to 3%… The RBNZ too is behind the inflation 8 ball just like the Fed is, as inflation in New Zealand is running above 8%, which is quite a bit higher than their target rate of 1-2%… Any way, since currency traders don’t’ seem to be interested in making a currency suffer for having interest rates below the inflation rate, I don’t see kiwi getting smacked around, but instead to garner some love from investors for the higher than the average bear interest rate.

Gold was down on Thursday last week, and up on Friday… Go figure! Gold closed the day up $14.00 and breached the $1,800 level that the price manipulators had so brazenly capped it at earlier in the week a few times. Gold finished the day at $1,805. Silver traded in the same manner as Gold did, losing a little ground on Thursday, and then making it up and more on Friday… Silver gained 58-cents on Friday, and closed the week at $20.97…

The price of Oil ended the week trading with a $91 handle… And Bonds got sold late into the week with the 10-year’s yield rising to 2.84% I mentioned this last week, but Germany and the other European countries (not Club Med) have 3 months to figure out how they are going to heat their homes this winter… The European Union made overtures about cutting off Russian Oil, and then Russia said, “fine we’ll sell our oil to India, China, Iran, and any else that will pay for in rubles or Gold…

In The overnight markets last night… The PPT dogs must have been released, because this morning looks completely different than Friday’s close. The dollar is soaring this morning as the overnight markets have gotten the message from the PPT to prop the dollar up, and they have done just that! The BBDXY is up 7 index points this morning, the euro has dropped back below 1.02, after visiting 1.03 on Friday. The Aussie dollar has given back some of its gains, and even the Russian ruble got sold and trades this morning with a 61 handle. 

Part of the rubles’ problems this morning are being caused by the price of Oil falling out of bed. Oil trades this morning with an $87 handle!  Gold & Silver have gotten caught up in the dollar rally, and Gold is down $20 this morning, while Silver has given back 58-cents of its recent gains. 

I was feeling so good on Friday, watching Gold & Silver rise… At the same time I was fretting about the PPT, when were they going to come in, and mess this dollar selling all up? Well, I got my answer this morning… UGH! 

You know, in theory, the PPT makes sense for a country to have a wealth fund to get their currency out of a pickle time to time…  But, I’m no fan of price interference / manipulation. I believe markets should trade freely without interference from a Gov’t or Central Bank. Currencies, stocks, bonds, metals, they should all trade based on their fundamentals… 

Oh, I know, I’m dreaming about the “old days” once again…  The great song by Chicago, come to mind here: “Old days Good times I remember
Fun days Filled with simple pleasure Drive-in movies Comic books and blue jeans Howdy Doody Baseball cards and birthdays Take me back
To the world gone away Memories Seem like yesterday”  

Can you believe the BS that was being spread about last week regarding the CPI print? Let’s listen in the POTUS… ““I just want to say a number: zero. Today, we received news that our economy had 0 percent inflation in the month of July – 0 percent. Here’s what that means: while the price of some things go up – went up last month, the price of other things went down by the same amount. The result?: Zero inflation last month.”

Ahem… Mr. President, you really don’t believe that do you? C’Mon let’s be adults here and say that the annual / year on year, inflation rate is 8.5%.. So there may have been less inflation in July, but there wasn’t “zero inflation”… Now, wouldn’t that have been a better statement, and not left yourself out there for smart Alecs like me to point out how wrong you were?

Everyone should write him a note and point out that there WAS inflation in your household last month!

Oh, and while you’re at it, you also might mention something he seems to have forgotten… The food-at-home index, which represents food purchased in places like grocery stores for consumption at home, jumped by an annual 13.1 percent, which is the fastest pace since March 1979.

Do you remember 1979? Things were awful in the U.S. inflation was still strong, Fed President Volcker had begun his huge rate increases, The Oil embargo was still stinging, and we still had U.S. citizens held as hostage in Iran…

OK, onto something else… Not that I keep up with what’s going on in Argentina, other than the reports that Bill Bonner files when he’s living there, but this news caught my eye, and I think will get yours too… Argentina’s central bank raised its benchmark interest rate by 950 basis points on Thursday as the country struggles to keep a lid on spiraling inflation that rose to a 20-year high of 71%, according to new data.

The central bank raised the benchmark “Leliq” rate for the 28-day term to 69.5% from 60%, a rate the bank set just two weeks ago when it hiked the rate by 800 basis…

Ok, I get it, why talk about Argentina when they are a banana republic/ 3rd world country, and the U.S. is not… Well, let’s not go there because I can show you how the U.S. is just like a banana republic…. But for comparison purposes let’s say they are not… Well, I’m not saying that the U.S. will ever be raising interest rates 900 Basis Points to combat inflation, But what if they were? YIKES…

Joel Bowman who writes for Bonner Private Research included a job description of the new Agents of the IRS…  and one of the requirements listed included: ““Carry a firearm and be willing to use deadly force, if necessary.”  

Chuck again… I want you to focus on that… OK, last week there was a report that the in the Inflation Reduction Act that there was an allocation of $80 Million to the IRS… The IRS says they are going to beef up Agents, and they could be coming for you! Why do IRS Agents need guns, ad the ability to use deadly force? All those mental giants (NOT!) that call for defunding the police, I would have to say that this news will drive the bonkers!

I find taxation something that I do not care for… I would have been right with the colonial folks who revolted on the Tax Stamp Act, and other taxes… these days, the POTUS sends his tax plan to Congress where it gets a rubber stamp applied… We’ve come a long way from revolting over taxes, to allowing them to be shoved down our throats!

Moving on… The U.S. Data Cupboard this week gets back on the real economic data prints train tracks… First up tomorrow is Industrial Production, and Capacity Utilization, on Wednesday we’ll see the color of the July Retail Sales… The Butler Household Index is not indicating that Retail Sales will be strong in July, just an FYI…

To recap… the currencies and metals were mixed going into last weekend. Down on Thursday, up on Friday… Gold has breached the $1,800 figure, finally… And Silver ended the week within spitting distance of $21… Chuck has a problem with the Potus’ claim that there was no inflation last month… And what on earth is an IRS Agent going to do with guns and a license to kill? The overnight markets the PPT got their message abroad, and the dollar has recovered a lot of its losses from last week in the overnight markets… It’s an ugly morning, and start to the week… 

For What It’s Worth… Here’s a piece from Bill Bonner’s letter late last week titled “What If They’re Wrong?” And you can find the article here: What if They’re Wrong? – Bonner Private Research (substack.com)

Or, here’s your snippet: “On climate… on inflation… on the economy… on how best to run YOUR life?

Yesterday, Massachusetts signed onto the Great Transition crusade. The Washington Post:

“Described as a “landmark bill,” the Massachusetts climate legislation notably includes a provision — the first of its kind for the state — that would allow 10 municipalities to legally ban fossil fuel infrastructure in new and major construction projects. With this policy, certain cities and towns in Massachusetts could soon join others across the country that have taken similar steps to change local building codes to block the use of fossil fuels, such as natural gas — meaning many people who want gas stoves or furnaces are probably out of luck in these places.”

What if they’re wrong? What if trying to change the earth’s climate is a wild goose chase?

The Pentagon was in the news yesterday too. In what ‘CovertAction’ calls the “Most Bloated Military Budget in History,” Democrats and Republicans joined hands to deliver defense contractors an $850 billion payday – a $45 billion increase.

Supporters say the US needs to spend such huge amounts of money to counter the many threats they’ve managed to stir up – Russia, China… terrorists… gender inequality!

A Lifetime Setback

But what if they’re wrong? What if all that spending actually weakens the US economy… frightens foreigners… and causes potential enemies to ‘gun up’ themselves?

Terrorists… Chinese… Russians – aren’t we pushing them to find new forms of money… new weapons… new friends?

What does it matter if you’re wrong?

Marry the ‘wrong’ person, for example, and you might dread every breakfast.
Making the wrong career choice, too, could be a lifetime setback.

In matters of public policy, the consequences of wrongness are directly proportional to the ambition of the undertaking. Generally, the grander the project, the greater the damage. Many public policies are just reflections of a consensus – drive on the right… don’t throw trash out the window – and do little damage.”

Chuck again… Yeah… the Gov’t was so wrong with their shut down of the economy… there are always consequences of actions…. I don’t think Gov’ts ever consider the consequences of their actions… I’m just saying…

Market Prices 8/15/2022: American Style: A$ .7034,  kiwi .6370,  C$ .7750, euro 1.0197, sterling 1.2097, Swiss $1.0575, European Style: rand 16.4034, krone 9.6801, SEK 10.2944,  forint 391.28,  zloty 4.5936,  koruna 23.9658, RUB 61.65, yen 133.32, sing 1.3767, HKD 7.8371, INR 79.53, China 6.7762, peso 19.97, BRL 5.0953,  BBDXY 1,267.40, Dollar Index 106.21, Oil $87.55, 10-year 2.82%, Silver $20.26, Platinum $937.00, Palladium $2,172.00, Copper $3.59, and Gold… $1,774.35

That’s it for today… Well, my beloved Cardinals won 2 of 3 and extended their lead over the Brewers this past weekend… They should have swept them! One bad pitch cost them the game on Saturday night… the nights here have been very enjoyable to sit out and watch the baseball games… Albert Pujols reached back to 2010, yesterday and hit two home runs in the game! A race to the finish line now for the Cardinals and Brewers to see who wins the division. Had a good time Saturday at the St. Paul Soccer Tournament, hanging out at the beer booth with friends, Duane, and Rick, and with Allison Road! Ok… Leon Bridges takes us to the finish line today with his song: I’m Coming Home… Don’t know that one? YOUTUBE it I think you’ll like it, I know I do! I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

 

August 11, 2022

* Currencies turn the table on the dollar… 

* The Inflation Reduction Act will not live up to its title… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Another beautiful day, weather wise, here in my little river town yesterday, I spend a good part of the day outside! Little Evie was here last night, and her and I went for a short stroll down the street… I was telling her how a man is supposed to walk on the outside of the street so that the horses can’t nip at the ladies walking on the inside. She laughed at me and told me I was silly… I laughed at me too, and told her she was right! My beloved Cardinals got back to winning last night beating the Rockies. It was good to see them come out of the gate in the 1st inning and score 5 runs, just to let the Rockies know that there would be no more spankings! Robert Plant greets me this morning with his song: In The Mood…

And that song puts me in the mood to talk about how 2 of the 3 JPMorgan metals traders that were being tried for price manipulation, were found guilty yesterday, and sentencing won’t take place for a year, but the ruling calls for years in prison, but you and I both know that won’t happen… The finding of these two guilty adds to the previous problems at JP Morgan… So, I have to ask this question… “How does Jamie Dimon still have a job?”

OK, I got that off my chest… The dollar got sold further as the day went along yesterday… The BBDXY lost 10 index points, and ended the day at 1,259. The euro climbed to within spittin’ distance of 1.03, and the pound sterling, who had trouble gaining after the BOE announced a rate hike last week, finally got up off the mat, and moved higher. Gold lost $1.50 on the day, while Silver gained 9-cents. Gold finished the day at $1,793.90, and Silver at $20.69… It was an “up day” for the price of Oil yesterday, and black Gold, Texas Tea, gained $3 to end the day with a $91 handle.

I haven’t seen a day where the dollar gets sold like it did yesterday, in a moth of Sundays… So, here’s the skinny on what caused the dollar to get sold, stocks to rally, and Gold barely move at all… The stupid CPI printed yesterday, and the markets and spin doctors did exactly what I said they would do… They would trumpet the print of inflation at 8.5%, down from June’s 9.1%, and think that the Fed’s previous rate hikes have brought inflation down, and that they won’t need to hike rates so aggressively any longer…

And that’s exactly what happened yesterday… But remember what I told you yesterday, about what happened in the 70’s… that in the midst of rising inflation, we had a month or two of slowing inflation, and then all hell broke loose with inflation once again… I’m thinking that this is very eerily familiar with that time, eh?

But you know what? The only real reduction in prices last month came from the Oil prices, which were down almost 8% for the month… But… before you go out an party, Food was up 1.1% — eggs alone were up 4.3% — and shelter’s up 0.5%. Also up for the month: medical care, motor vehicle insurance, household furnishings and operations, new vehicles and recreation.

It’s really a misleading report folks… I wouldn’t be jumping back into the stock market with both feet, based on a hedonically adjusted inflation report from the Gov’t… George Carlin the famous comedian said it best when he said, “I have a rule and it’s I never believe anything the Gov’t tells me”… Pretty good rule if you ask me, given their track record in just the last 3 years!

In the overnight markets last night… The dollar got sold further down the river, and the BBDXY lost 2 more index points, the euro did move past 1.03, and the Aussie dollar (A$) is trading above 71-cents this morning. The Currencies look healthier than they have been for some time this morning, after the dollar selling yesterday and in the overnight markets.  

Shoot Rudy, even the Chinese renminbi gained overnight, and the yen got off the mat before the count reached 10!  And no sign of the PPT? I’m sure they’ll show up sometime before the week is out… 

Gold & Silver have not seen any love from the dollar selling though, as Gold starts the day down $3 and Silver starts the day down 15-cents… but the day is young, and with all this dollar selling the metals should turn around at some time.  I say “should” but in reality, there’s no given in the markets any longer based on fundamentals, and historic trading patterns. 

The price of Oil is up a buck this morning and is trading with a $92 handle, while bonds got bought yesterday… Hmmm… if everyone in the markets is now convinced that the Fed is going to pivot in September when they next meet, then why would you buy a bond at today’s yield?  I’m just asking the question, because it seems to be strange to me… 

Publishing and author guru, Bill Bonner says that the U.S. just looked at strike three come right down the middle… Let’s go to his daily letter to get what he’s talking about..  “And so… the strike-out is complete…
Strike one: real wages are going down…
Strike two: real GDP is going down (US in recession)…
Strike three: Real productivity is going down….
And you’re out! 

How do you like that? Mighty Casey, the USA, has struck out.” – Bill Bonner in his Bonner Private Research letter… 

Well, no one that I read, believes the Inflation Reduction Act, is going to do anything to reduce inflation, but what the heck, the leaders of this country tried, right? You can’t blame them if they have a box of rocks for brains We elected them! It’s our fault that the country is heading down the path of destruction… OK, I’m getting carried away here, it’s not our fault, unless you want to point the blame finger at the fact that we didn’t ride our elected leaders hard and put them away wet, and let them know that they wouldn’t be getting reelected if they kept allowing money to be spent that we didn’t have!

I get a new Agora newsletter that just showed up in my email box, titled: Agora Uncensored… Here’s the opening thought in the letter yesterday: “Only in America can our leaders call an inflationary bill that spends $430 billion of taxpayer money an “Inflation Reduction Act.”

Only in America can we have two straight quarters of negative economic growth, and leaders deny we’re in a technical recession. (We own a Dictionary, Mr. Powell.)

And… only in America can the stock market have a rip-your-face off rally because “inflation” was only 8.5% in July.

But here we are.

Gasoline prices fell more than expected last month (they’re still VERY expensive. The primary reason they fell is that demand is LOWER than it was during the Summer of COVID).

Home prices are unaffordable, but good news.

They were less “less affordable” than expected in July.

And good luck at the grocery store because my Cheerios are now the size of a tissue box.”

Chuck again… Yes I too feel the same way, everything is so confusing and backwards, and caddy Wampus! It’s so difficult to look at any news, or data print and know for sure which way the markets will trade based on the news or data.

I’m still on stock market collapse watch… I just wanted to let all those boys crying wolf know, that the wolf hasn’t shown up yet…

A handful of Fed Heads will speak today, following the lead by a couple yesterday who reiterated that more rate hikes will be needed… At least they are saying the right things, let’s see if the Fed Heads today do the same… 

The U.S. Data Cupboard yesterday had the stupid CPI that we talked about above. And today’s Data Cupboard will have July’s print of PPI (wholesale inflation), which should follow the stupid CPI’s lead and not be as strong as it was in June (+1.1%), but still be up and thus keeping the pressure on consumer prices…  We’ll also see the usual Tub Thumpin’ Thursday fare today when last week’s Initial Jobless Claims print… Recall that two weeks ago the claims surged to 260,000 and I truly believe that this surge will contunue… 

To recap… the dollar is getting sold down the river, and the PPT is nowhere to be seen… The euro has climbed above the 1.03 figure, and the Aussie dollar is above 71-cents this morning! Gold & Silver haven’t been allowed to participate in the dollar selling, but Chuck thinks that they will at some time, but then only the Shadow Knows…   The Inflation Reduction Act is not going to reduce inflation, or do anything to help the middle class…  What else did you expect from our elected leaders who have a box of rocks for brains? 

For What It’s Worth… Ok, I saw this article on Reuters and said to myself, “this is the kind of article that the FWIW section was made of”… This is an article about NYC charging a fee for causing congestion… Really! and the article can be found here: New York City drivers could face up to $23 a day congestion charge | Reuters

Or, here’s your snippet: “New York City could introduce a traffic congestion charge of up to $23 a day late next year, which a study released on Wednesday projected would reduce the number of cars entering Manhattan by 15% to 20%.

The city wants to charge a daily variable toll for vehicles entering or remaining within the central business district, defined as between 60th Street in midtown Manhattan and Battery Park on Manhattan’s southern tip.

New York, which has the most congested U.S. traffic, would become the first major U.S. city to follow London, which began a similar charge in 2003.

New York lawmakers approved the plan in 2019, and it was originally projected to start in 2021. But the federal government under President Donald Trump did not take any action.

The Federal Highway Administration (FHWA), which must approve the move, said on Wednesday it approved the required environmental assessment. The agency will review public comments submitted by Sept. 9.

It did not give a timeline for its decision, but the Metropolitan Transportation Authority (MTA) said the fee could come into effect up to 10 months after approval is granted. That period would be for system design and implementation.

“Congestion pricing is good for the environment, good for public transit and good for New York and the region,” MTA CEO Janno Lieber said.

Passenger vehicle drivers could pay $9 to $23 to enter at peak times, while overnight tolls could be as little as $5. Drivers could apply existing bridge and tunnel tolls to congestion charges.”

Chuck again… What kind of charge/ fee will they think of next?  I find this kind of nickel and diming people to be stupid thinking… 

Market Prices 8/11/2022: American Style: A$ .7101,  kiwi .6421,  C$ .7829, euro 1.0334, sterling 1.2205, Swiss $1.0625, European Style: rand 16.1618, krone 9.4992, SEK 10.0261,  forint 381.91, zloty 4.5333,  koruna 23.5850, RUB 60.98, yen 132.54, sing 1.3695, HKD 7.8460, INR 79.63, China 6.7394, peso 20.02, BRL 5.0924,  BBDXY 1,259.15, Dollar Index 104.93, Oil $92.88, 10-year 2.77%, Silver $20.54, Platinum $960.00, Palladium $2,262.00, Copper $3.64, and Gold… $1,791.42

That’s it for today…  After all the very hot days we’ve had here in the Midwest, this new run of not-so-hot days is great! I can go outside and not wilt! Cards and Rockies in a day game today… I love day baseball! I also like watching the Little League World Series games… The teams consist of 12-year old kids that are a true reflection of life… One kid might be 5-6 and weigh 200 lbs, and another kid might be 5 feet tall and weigh 100 lbs dripping wet… Well, not that I’m bragging about this, but I have now read all of the Stone Barrington novels, with only the 2 newest ones to be read, when they become paperbacks… that 62 books folks…  Before this, I read all of the Harry Bosch books, the Atlee Pine books, and others… Maybe I should be finding a new hobby?  The great King of Soul, James Brown takes us to the finish line today with his song: Papa’s Got a Brand New Bag…  I hope you have a Tub Thumpin’ Thursday today, and will have a wonderful weekend ahead, and please remember to Be Good To Yourself!

Chuck Butler

 

August 10, 2022

* Currencies turnaround their overnight gains on Tuesday

* Gold gets capped at $1,800… 

Good day.. And a Wonderful Wednesday to you! OUCH! Now that’s going to leave a mark! That’s what the Cardinals pitchers had to think last night as they got spanked by the Rockies. The game was so ugly that I turned the TV to the little league World Series… The sun finally came out yesterday, and it was very nice out, so much so, that I even took a short stroll down the street! I often don’t feel up to going out for a stroll, and when it’s in the 90’s I just forget about it! The great sultry voice of Dionne Warwick greets me this morning with her song: Walk On By… Now that’s a voice I would wake up to any old day!

As I hit send yesterday morning, I noticed that Gold was pulling back from its early morning gain of $12… The price manipulators must have gotten well fast and returned to work! Gold ended the day up $4.70, yo close at $1,79470. Silver gave back some of its 73-cent gain on Monday, to the tune of 14-cents, and close the day at $20.61… The BBDXY, which reflected that the dollar had been sold in the overnight markets recovered a bit and ended the day up 4 index points… I keep saying this over and over again, sounding like a broken record, but to me, I believe that currency traders want to sell dollars, for they know the U.S. in a mess, but with the PPT having their pockets bulging with Exchange Stabilization Funds propping up the dollar, I believe traders think it’s like “fighting city hall”…

The euro remained above 1.02 on the day Tuesday, but could not muster enough interest in traders to bid it higher on the day. The Aussie dollar (A$) traded ever-so-briefly at 70-cents yesterday, before falling back… Sort of like the command that the red coats used to use “fire and fall back”… A longtime reader, sent me a note yesterday, asking why the Mexican peso seemed to be stuck in the mud… I fired off an article from my friends at FXStreeet, for his viewing pleasure, but to give you the Reader’s Digest version, Mexican interest rates still aren’t strong enough to give investors a “risk premium”, but with the price of Oil still strong, these two things are fighting each other, and that leaves the peso stuck in the mud…

I wish the dollar’s strength was more easily explained! Sure the Fed Heads are raising interest rates, but, they are still so far behind the inflation 8 ball that they can’t be seen! I’ve explained this before, but for those of you who missed class that day, with inflation at 16% (per shadowstats.com) and our official Fed Funds Rate at 2.5%… That’s a real negative rate of -13.5%… Oh, sir, may I have another? NOT

The price of oil slipped by a buck yesterday, and ended the day trading with a $90 handle, and Bonds remained steady, with no movement…

In The overnight markets last night… the dollar got sold again in the overnight markets and were right back to the same level this morning as the BBDXY was yesterday morning, 1,269… So the BBDXY is down 4 index points to start the day today.  The euro is holding above 1.02, and the rest of the currencies fall into line behind the Big Dog euro… All of the currencies except the Czech koruna, which is the outlier this morning, having rallied to trade below the 24 handle for the first time in a month of Sundays. 

Gold has given back the $4 it gained yesterday in the early trading today, and it starts the day at $1,790. Silver has lost 18-cents to start the day, and trades this morning at $20.43…   The price of Oil has dropped again to an $88 handle this morning, and bonds are still stuck in the mud. 

I mentioned above that the price manipulators apparently got back to work yesterday… Gold was capped at $1,800 yesterday, and it was so brazenly done that even a blind man could see it!  Ed Steer mentioned in his daily letter that can be found here: Ed Steer’s Gold and Silver Digest (edsteergoldsilver.com)… this how Ed described it: “Once again there was obvious interference in precious metals prices on Tuesday — and it was most egregious in gold, where its price was capped and smacked lower the moment it broke through $1,800 spot. Silver, platinum and palladium had their comeuppance in COMEX trading in New York as well.

Gold, silver and platinum are now above their respective 50-day moving averages by a bit — and with the low volumes we’ve seen in the first two precious metals over the last few days, there’s not much sign of panic short covering by the Managed Money traders as of yet.”

Chuck again… one of these days, and I hope it’s soon, but know in my heart of hearts it won’t be, that these dastardly price manipulators are all lined up along a wall and given their last cigarette…   The good folks at GATA, Ed Steer, me, and others have laid out the ponzi scheme of price manipulators for all to see, but to date, most people turn a blind eye toward our attempts to bring this to light… 

Speaking of things that seem to be stuck in the mud… Let’s visit the Hong Kong Dollar or honker if you will… I read a piece over the weekend that talked about how much the Hong Kong Central Bank was having to spend to keep the peg of the currency to the dollar… Then I found this on Blooomberg.com, for your edification… “The Hong Kong Monetary Authority, the de-facto central bank, has a mandate to keep the currency trading at HK$7.75 to HK$7.85 per US dollar. The current band was set in 2005 and has never been broken. When it gets too close to one end or the other, the HKMA intervenes, either by buying or selling the city’s dollars. When HKMA uses its foreign exchange reserves to buy Hong Kong dollars from the commercial banks, the aggregate balance of Hong Kong dollars in the banking system — interbank liquidity — goes down accordingly. From May 11 through late July, the HKMA bought a total of HK$172 billion ($22 billion), shrinking the balance by more than half. That tighter liquidity pushes up local borrowing costs.”

Chuck again… So, you see it’s the peg that keeps it so range bound, and tight in the range. Remember when the U.K. turned over the country of Hong Kong to the Chinese? I wrote then that it was my belief that the Chinese would allow the honker to begin to float, so they could get their feet wet, so to speak, and learn about having a floating currency. They would allow this to go on for a couple of years, before then allowing their renminbi to float, and folding the honker into the renminbi…

I had no inside information that had me believing that, it’s just how I would do it if I was just given a country that had a different currency than mine, and that it was pegged to the dollar… But, as you all know, none of that happened, and the peg to the dollar still exists…

I was also technically wrong when I said at the Orlando Money Show in 2003, that by the end of the decade the renminbi would be the reserve currency… I say technically because while it wasn’t “THE” Reserve currency it did become “A” reserve currency as it was included in the Special Drawing Rights (SDRs)

But you won’t see me beating myself up over those two wrong statements of how I saw things working out… Time change, things change, I change… I roll with the punches, adapt, improvise, and change my stance…

Speaking of China… Reports yesterday have China’s inflation rising to a two year high, with pork really surging… Looks like inflation is taking hold over the world… And especially in countries that have shut down their economies during the plandemic… But also countries that have oodles of debt… I’m just saying…

Yesterday, I pointed out how behind the times the Bank of Japan was, and that was why the Japanese yen was hanging by it fingernails to the edge of the cliff… Well, I read yesterday that the Bank of Japan is planning on announcing a continuance of their current monetary policy, (read negative rates) … I can see traders stomping on the yen’s fingernails once that news gets wide distribution…

The U.S. Data Cupboard has the stupid CPI for us today… July Consumer Price Inflation (CPI) will print this morning, and the so-called experts have inflation falling in July from June… And you can bet your bottom dollar that the spin doctors will be saying that the Fed’s rate hikes are taking hold, and that inflation is now under control… Well, I’m telling you that when you hear that junk, just turn it off, because it couldn’t be further from the truth!

Here’s where knowing history might help us… In the 70’s, when we had a run of high inflation, there was a time when it appeared that inflation had been beaten back, only to have it rise up again a month or two later… I fear that this is what we are going to experience now… People will get lazy, and assume the rate hikes so far are good enough…  Got Gold? 

To recap… Tuesday was a turnaround Tuesday, and not for the good for the currencies, as the dollar selling in the overnight markets Monday night, was turned around to a gain for the dollar by the end of the day Tuesday. Gold’s rise was capped at $1,800, in a brazenly disgusting display of price manipulation.  And the BOJ thinks that they can continue their negative yeilds monetary policy without harm. The yen fell to 136 on the news, just like Chuck thought it would… 

Before we head to the Big Finish this morning, I wanted to point something out that just doesn’t make sense to me, and I wonder what the ROI is on missiles…  Reuters reported this morning that: “Russian shelling killed 11 people in Ukraine’s central Dnipropetrovsk region overnight.”  The Russian shelling netted only 11 kills, that just seems like they are wasting ammunition and money… But then I’m not a fan of any war, so there’s that… 

For What It’s Worth…  Well this is the second time this week that I’ve chosen a piece of the 5 Minute Forecast for the FWIW…  I saw the stuff on this piece a week ago, and thought, that this is the most disgusting display of being an elite that I can think of… This is Dave Gonigam’s thought on the Fed San Francisco President, Mary Daly, and her comments on inflaton… Take it away Dave!

Maybe you saw the story last week: San Francisco Fed President Mary Daly put her foot in it during an interview with Reuters — waving off inflation as no big deal. “I don’t feel the pain of inflation anymore,” she said.
“I’m not immune to gas prices rising, food prices rising; I sometimes balk at the price of things, but I don’t find myself in a space where I have to make trade-offs, because I have enough. Many, many Americans have enough.”

And the trade-offs people do have to make are no biggie, she added: “You may not be able to go to the vacation you want. You may end up instead camping or doing a staycation.”

Easy for her to say. In her current gig, Daly pulls down $427,000 a year. Granted, San Francisco is expensive, but still…

➢ Which reminds us: Earlier this summer, the well-heeled Garrison Keillor of A Prairie Home Companion fame similarly blew off inflation: “Don’t be disheartened. Deal with the problem. If you’re troubled by inflation, cut back on expenses. Don’t buy sparkling water. Fill up the glass with tap water and if you want bubbles, stick a straw in the water and blow.” For real…

Anyway, it was the most tone-deaf moment by a Fed leader since New York Fed chief Bill Dudley’s edible-iPad moment more than a decade ago.”

Chuck again…  in case you forgot what Bill Dudley’s edible-iPad moment was here’s a quick explanation: On the basis of a wonky concept known as “hedonic adjustments,” Dudley essentially told the crowd that consumer price inflation was a figment of their imaginations. He cited the iPad — which had come on the market barely a year earlier.

“Today,” he explained, “you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.”

Chuck again, that’s for real folks… he actually said those things back in 2011… Dudley stepped down from the Fed in 2018, never to be heard from again… 

Market Prices 8/10/2022: American Style: A$ .6970,  kiwi .6309,  C$ .7765, euro 1.0247, sterling 1.2101, Swiss $105.45, European Style: rand 16.4649, krone 9.6814, SEK 10.1279,  forint 387.90,  zloty 4.5865,  koruna 23.8289, RUB 60.86, yen 136.00, sing 1.3771, HKD 7.8481, INR 79.51, China 6.7554, peso 20.20, BRL 5.1156,  BBDXY 1,269.08,  Dollar Index 106.27, Oil $88.84, 10-year 2.79%, Silver $20.43, Platinum $934.00, Palladium $2,194.00, Copper $3.59, and Gold… $1,790.41

That’s it for today.. A Short letter yesterday, a long one today, sort of like the price of Oil, up one day down the next!  16-5 was the score of the baseball game last night as the Rockies routed the Cardinals… Death by a 1,000 cuts was what watching this game was like… One of the good things about baseball, is you can forget about yesterday’s game, because there’s another game to play today! Not much else going on so… Steely Dan takes us to the finish line today with their great song: Aja…  Aja, when all my dime dancing is through I run to you… Yeah, that song…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself! 

Chuck Butler

 

 

 

 

August 9, 2022

* The dollar gets old on Monday and Monday night

* Currencies inch higher in the overnight markets

Good Day… And a Tom Terrific Tuesday to you! Yesterday was supposed to be our last day of reaching 90 degrees for the next 10 days, so it will be interesting to see what happens today. I for one, know that the yesterday held onto the 90’s, as I tried to read outside, but was driven back in by the heat of the sun… UGH! I apologize for yesterday’s letter tardiness… About a year or so ago, I wrote about how I was retired now, and I wasn’t going to set an alarm any longer, and I would write when I woke up, whenever that may be in the morning… Well, I tried that out yesterday, and well, it felt pretty good to wake up when my body was ready to wake up, but… I kept sounding like the White Rabbit… I’m late, I’m late, I’m late to a very important date. The Eagles greet me this morning with their song: Wasted Time…

I know that yesterday’s tirade about the spending bill, taxing bill, claptrap bill, whatever you want to call it, was wasted time… Because it’s water under the bridge now… I think the markets were not happy with the makeup of the bill, because Silver had one hell-of-a-day yesterday, gaining 74-cents on the day! Gold’s gain wasn’t too shabby either, with Gold gaining $12.60 on the day! The BBDXY lost 4 Index Points on the day, giving the currencies some breathing room from the oppressive pressure the dollar has had on them for some time now. But when I looked at the currencies last night, they looked as though they were still trading in the day before’ s clothes… So, I don’t know where the BBDXY lost its 4 Index Points, but it wasn’t to the euro, Aussie, kiwi, and others…

Gold, by the way, closed the day at $1,790.00, and Silver at $20.74… And would have to think that the price manipulators were all out sick yesterday! There’s going to be hell to be paid when they return I’m afraid…

The good news there is that Ed Steer reports this morning that it was short covering that pushed Silver higher yesterday.. I like the sound of that “short covering”… Let’s hope that’s a trend that continues! 

The Price of Oil rebounded yesterday, after falling to an $88 handle, it jumped back to a $90 handle to end the day… There are so many traders out there that want to punish Oil for lack of demand… I have to say this anecdotal view, and that is the last two times I’ve pulled into a gas station, all the pumps were taken and I had to wait… It sure doesn’t look like a lack of demand from where I sat in my car, waiting my turn!

In the overnight markets last night… the dollar was sold further down the river, with the BBDXY losing another 4 points to trade this morning at 1,269… The euro has climbed back above the 1.02 figure and the rest of the currencies are inching higher VS the dollar. Gold is up a buck and change to start the day, while Silver has given back 11-cents of its gains yesterday. 

The price of Oil inched higher to trade this morning with a $91 handle, and bonds were pretty much stuck in the mud yesterday with the 10-year’s yield at 2,79% this morning.  I don’t know if you’ve been watching it or not, but Copper sure has rebounded from a sell off the past couple of months… Copper is up 10-cents since before I left on vacation… 

I’m so fed up with our elected leaders… I wish I could put them all on a slow boat to China! They, as a group, continue to throw trash on the middle class, and leave their wealthy buddies without fear of taxation… I’m middle class, I was born middle class, and I’ll die middle class, that is if there is still such a thing when it comes my time! My dad used to tell me this bit: “Chuck, every time a guy like me (middle class) starts to get ahead in life, the hand of Gold smacks me back down to earth”… These days we could say that the hands of elected leaders keep smacking us down…

And here we go again… Our elected leaders haven’t pushed back on this one iota… What is he talking about now? Ahhh grasshopper, pat attention here for this is Russ and Pam Martens reporting on their web site: www.wallstreetonparade.com: “On July 28 last year the Fed announced that it was creating a $500 billion permanent bailout facility for the trading houses (“primary dealers”) on Wall Street to support “smooth market functioning.” The Fed gave the facility the bland name of “Standing Repo Facility” or SRF. What the Fed was effectively doing was creating a new “discount window” where both Fed member banks and Wall Street trading houses could obtain billions of dollars in cumulative loans if a liquidity crisis arose.
The resolution issued by the Fed in conjunction with the announcement indicates that the $500 billion ceiling can be “temporarily increased at the discretion of the Chair.” That means that Fed Chair Jerome Powell, who just recently started a new four-year term, has the power, without any advice and consent from Congress, to throw unlimited amounts of money at the trading houses on Wall Street. …

The Federal Reserve is doing something it has never been allowed to do in its 109 years of operation. And the Fed is doing it without any pushback from Congress.”

Chuck again… yes, congress not doing their jobs of protecting us from financial failure… I shake my head in disgust!

And then on top of that, Reuters reported this over the weekend: “The trillions of dollars in overnight cash tucked away daily at the Federal Reserve could turn into a major headache for banks that could squeeze their balance sheets and impair their ability to lend.

The Fed’s reverse repurchase facility (RRP) has attracted a wide array of market participants, helping mop up excess liquidity in the financial system. Led by money market funds, volume at the reverse repo window has topped $2 trillion for 39 straight days.

The Fed is paying a record reverse repo rate of 2.3% following its 75-basis-point interest rate hike last week. Barclays expects daily reverse repo levels to hit between $2.8 trillion and $3.0 trillion by the end of the year.

Investors are effectively taking deposits away from banks and putting them into government money market funds, which invest mainly in Treasuries and repos. These money funds, in turn, funnel the cash to the Fed’s overnight window.”

Oh, what a tangled web we weave, eh?

Early in July, the Japanese yen was rallying and had caused some of the short sales in yen to be closed out, thus pushing the yen even higher VS the dollar. But then once that event was taken care of, traders got back to selling yen, and it has lost of the ground it had gained and then some, as the yen moves ever so close to the 135 handle. The yen is the worst performing currency this year, and well it should be, because they have not joined the rest of the industrialized nations and hiked their interest rates…

Last week, the Trade Deficit for July printed, and it has narrowed from the June number of $85 Billion, narrowing to $79.6 Billion… Here’s MarketWatch.com with their take on this deficit: “The U.S. posted a record trade gap last year and is on track to do so again in 2022 despite a recent downtrend.

A higher deficit subtracts from gross domestic product, the official scorecard of the U.S. economy. The large trade gap was the chief reason GDP contracted in the first quarter for the first time since the start of the pandemic.

While a lower deficit gave a boost to second-quarter GDP and might do so again in the third quarter, the benefit is unlikely to last. The global economy has weakened and that will probably curb U.S. exports.”

Yes, U.S. consumers are strapped to find more quarters in the sofa and recliner to pay for their cell phone bills, much less anything else that might come from another country (which for the most part is everything including the kitchen sink!) Remember late last year when I told you that it was being reported that a large percentage of U.S. consumers didn’t have $400 saved to pay for an unexpected Bill? Well, let’s see now we bring this up to date, and those same households are in worse shape… Inflation, no interest on their deposits, stock market sinking, Companies starting to lay off workers… it all adds up to one big headache for U.S. consumers…

The U.S. Data Cupboard just has the stupid 2nd QTR Productivity report for us today… The number will be negative, and will show that workers are not working longer hours…

To recap… the BBDXY lost 4 index points yesterday, but the currencies all look like they are trading in Friday’s clothes… The price of Oil rebounded back to $90 handle on the day, and bonds got bought… Gold gained $12 on the day yesterday, and Silver gained 73-cents! It was a good day for Gold & Silver, and Chuck thinks the price manipulators must have all been out sick! I can imagine that there will be hell to pay when they return! Chuck talks about some trickery the Fed has pulled over our eyes, and how congress has failed once again to protect us from financial collapse…

Before we head to the Big Finish today, I wanted to say a word in remembrance of Olivia Newton John, who died yesterday at the too young age of 73… She amazed young boys in Grease, and then a recording career… RIP Olivia Newton John

For What It’s Worth… A year or so ago, I went ballistic over news that a college had forgiven the student loans… Now it’s even worse, the Gov’t is considering paying down Student Debt… Obviously, with money it doesn’t have, and will turn to taxpayers to pay these debts… I can’t even begin to explain how awful this will all be, and to that end, this 5 minute video from Prager U, came across in my email box, and how timely it was! Take 5 minutes to watch this video, please; : https://www.prageru.com/video/the-student-loan-forgiveness-scam?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_4802504

That’s it for today for The FWIW… I hope you enjoy the video…

Market Prices 8/9/2022: American Style: A$ .6980,  kiwi .6289, C$ .7777, euro 1.0229, sterling 1.2106, Swiss $1.0486, European Style: rand 16.6354, krone 9.7074, SEK 10.1512,  forint 388.76,  zloty 4.5990,  koruna 24.3427, RUB 60.66, yen 134.92, sing 1.3782, HKD 7.8488, INR 79.65, China 20.7527, peso 20.22, BRL 5.1124, BBDXY 1,259.96, Dollar Index 106.17, OIl $91.89, 10-year 2.79%, Silver $20.63, Platinum $941.00, Palladium $2,063.00, Copper $3.58, and Gold… $1,791.55

That’s it for today… My beloved Cardinals get back on the field tonight at Coors, in Denver Co. With it being Mountain Time, the game will be on much later than usual, and that means I will not be watching the complete game. UGH! I sent my longtime friend, Mike, a birthday text yesterday, and he responded, “Thanks Charlie, the years just keep getting tougher”… Mike has been experiencing some getting older pains, that are tough on him as he is a carpenter… Getting Old isn’t for sissies… I had an old man tell me that a couple of years ago… Next up is my daughter Dawn’s birthday… Now she is the poster child for not looking her age! The letter is shorter today because of not having a snippet to the FWIS article… And it’s on time today! The Allman Brothers take us to the finish line today with their song: Statesboro Blues… “if you can’t make it your sister Louise said she can go”… Yeah that song! I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler