November 11, 2021
* The dollar gets bought by the bushelful on Wednesday
* Gold & Silver finally get on the inflation hedge rally tracks!
Good Day… And a Tub Thumpin’ Thursday to one and all! Today is Veterans Day! A day that should be a national holiday in my book, and not a semi-holiday… I’m getting my chimney swept for Veteran’s Day… I usually take a drive to the country to the burial grounds and put a new Flag on my Dad’s grave, but I think I’ll have to do that at another time this year, as it’s a rainy day… This weekend, I’m going to go to Columbia Mo. My youngest son Alex asked me to go to the football game with him, and I couldn’t say yes fast enough! It’ll be a cold day, but at least it’ll be during the afternoon and hopefully the sun will be out… And then next week I’m going to the Sports On Tap get together at Ball Park Village, with all the St. Louis Sports Writers.. Should be a good time! And the David Benoit band greets me this morning with their version of the Charlie Brown theme song…
Well, right out of the starter’s blocks yesterday morning, after I had hit “send” on the Pfennig, the Rocktober CPI (Consumer Inflation) printed… You know the one I said I wouldn’t put much credence in… Well, CPI for Rocktober rose to 6.2%, the largest jump in inflation in 30 years! And over at Shadowstats.com, John Williams has CPI at 10%… Either one was enough to get Gold traders off their duffs and turn around the early morning selling. Gold was up $27 just minutes after the CPI number was released… And I was smiling like the Cheshire Cat! But… then the profit takers and the price manipulators had to have something to say about this huge jump in the price of Gold, and they saw to it that Gold only gained $17.90 on the day, while Silver was able to gain 38-cents…
Gold closed the day at $1,850.90 and Silver at $23.73… In reading Omar Ayales weekly letter at www.goldchartsrus.net, I came across this quote from Omar, “Gold must now break above $1850 to clearly break away from its critical resistance area and show renewed strength that could reverse the year+ long downtrend and re‐establish the cyclical and secular bull markets that could push gold to its all time highs near $2100 initially” – Omar Ayales…
Well, after yesterday’s close, Gold was $1.850… So, now I’m looking for the shiny metal to reverse the year long downtrend, as Omar said!
I always like to have some technical analysis thrown my way, just to mix with the fundamentals that I used to always rely on, but can’t any longer… And my two go-to guys when it comes to technical analysis are Sean Hyman, and Omar Ayales…
Now, one would think that this latest inflation data would be enough to get the Fed/ Cabal/ Cartel Heads thinking about hiking rates to combat this rising inflation that, in my opinion, is going to keep getting worse…. But NOOOOOOO! Here’s what Mary Daly, Fed/ Cabal/ Cartel president in San Francisco had to say about the quickly rising inflation… “Right now it would be premature to start changing our calculations about raising rates. Right now, uncertainty requires us to wait and watch with vigilance.” I found that quote on Bloomberg.com and it just rankled me to no end, folks…
And guess what the dollar did on the day? It went bonkers! The dollar was the cat’s meow once again, and it soared higher… The BBDXY which started the day at 1,158.45, finished the day at 1,168.92… On Monday this week I said that after the dollar selling late last week that the euro was climbing back toward 1.16… Well, the single unit fell very far and fast, and this morning it trades with a 1.14 handle… UGH! So, why was the dollar so sought after yesterday? Well, traders don’t seem to follow what the Fed/ Cabal/ Cartel Heads have to say I guess… The Traders think that with inflation soaring that interest rates will be rising too very soon… Ahem… You Traders might want to take a look at what Mary Daly had to say… (above) …
I was shocked when I saw the DDBXY quote yesterday evening… What on God’s Green Earth, did traders see in that CPI number that would cause them to buy dollars like funnel cakes at a State Fair? Well, we’ve been through all that already, so I won’t repeat myself….
In the Overnight Markets last night… the buying of Gold continued, and the shiny metal is up $6.40 in the early trading, and Silver is up 26-cents, to bring it very near $25… But… that Gold & Silver buying isn’t stopping the dollar, and it was bought by the basketful in the overnight markets. The BBDXY is up to 1,170.11, and there really doesn’t seem to be anything that will stop the dollar’s rise at this point. Bonds got sold yesterday, along with Oil…
This is all strange to me, folks… this is not playing out anywhere near what I thought would be happening, with zero interest rates, the Fed/ Cabal/ Cartel, beginning to taper their bond purchases, and new deficit spending bills mounting up at the doorway, and above all, with inflation pointing its double barrel shotgun at the economy and your pocketbook…
In the 70’s, when inflation began to creep higher.. .the dollar was sold daily, Gold & Silver gained daily, and the economy was circling the bowl… I would have thought that we would revisit those times that were the dark days of the 70’s… And remember back in the 70’s the U.S. Debt was nowhere near where it is today… In fact, in 1973, the year that Gold was taken from the backing of the dollar, the U.S. Debt was $458 Billion… And the debt creators had just begun to start to pile on the debts of the free floating fiat dollar… by 1982, we, as country surpassed the $1 Trillion in Debt for the first time, at $1,142 Trillion…
So, here’s more on the inflation going on right now… This is Jeremy Grantham speaking to Bloomberg.com “Every bull market before this one had low inflation.”
The 6.2% increase in the consumer price index in October “would have been enough in any market since 1925 — and for all I know long before that — it would have been enough to have crashed the market,” said the value-investing giant and co-founder of Boston-based asset manager GMO. “But this time the faith in the Fed is so complete that when they say it is temporary we believe it.”
Chuck again… Why would stocks rally on the inflation news? Don’t these guys get it that inflation is going to eat away at consumer’s disposable income, and those purchases of Bit Screen TV’s, $100,000 cars, the latest blue tooth device, etc. will be put on hold… And you thought Corporate profits were bad during the plandemic? These losses will be HUGE, because… They all stocked up on their widgets because the Fed told them the inflation was only transitory, and the Gov’t keeps telling us the economy is roaring back, and now they have all these widgets and no one to buy them… Uh-Oh!
But not to worry, The President says he as an agenda that will deal with inflation! Oh, so now that inflation is soaring, your people are getting off their duffs to do something about it? What about all the months previous that people that should have known better, should have been doing something?
And, finally… the thing that really hits home with rising inflation is that wages are rising to keep in step with rising inflation… Wages are down 1-2% in the past year, while inflation is up more than 10%… Talk about negative yield, that’s negative disposable income, folks… All brought to you by your friends (not!) at the Fed/ Cabal/ Cartel…
OK, let’s talk about something else… So…. Did you like the webinar last night? I was glad I didn’t stumble, fumble, bumble during the webinar… I saw Rachel yesterday, and she said, “You look nice”, and I said, “I have that webinar tonight, and I didn’t’ want to have to change clothes!” Well, I think I got my point across that the markets are manipulated, and until someone with some gray matter in Washington D.C. brings it all to an end, we’re stuck with the manipulations…
Today’s Data Cupboard is empty… I guess the semi-holiday today has the data collectors off for the day… Tomorrow, we will see some 2nd tier reports like The Five Year Expectation For Inflation…. Wait! What? C’Mon, there’s no way we can tell what inflation is going to be next month, much less in 5 years! That’s just plain stupid, Charlie Brown!
To recap… Well Consumer inflation is soaring higher, and Gold & Silver are finally getting on the inflation combatants rail tracks… Yesterday, Gold was up more than $27 at one point before the price manipulators brought it back to right at $1, 850… The dollar got bought by the bushelful, and has Chuck scratching his bald head… You don’t want to get in front of that runaway bus that is the dollar right now, so batten down the hatches, and look for bargains…
For What It’s Worth… It’s been a while since I quoted Pam and Russ Martens at www.wallstreetonparade.com But this one caught my eye, and it talks about fears with leverage in the U.S. Financial System, and it can be found here: New Fed Report Shows High Leverage Poses Threat to U.S. Financial Stability: From Life Insurance Companies to Hedge Funds (wallstreetonparade.com)
Or, here’s your snippet: “New Fed Report Shows High Leverage Poses Threat to U.S. Financial Stability: From Life Insurance Companies to Hedge Funds
The word “leverage” appears 107 times in the Federal Reserve’s Financial Stability Report that was released yesterday. The second mention provides a warning of what happens when leverage blows up the financial system – something Americans learned all too well in 2008:
“Excessive leverage within the financial sector increases the risk that financial institutions will not have the ability to absorb even modest losses when hit by adverse shocks. In those situations, institutions will be forced to cut back lending, sell their assets, or, in extreme cases, shut down. Such responses can substantially impair credit access for households and businesses.”
Perhaps this is an understatement from the Fed. Not only did major institutions like Bear Stearns and Lehman Brothers “shut down” from insolvency in 2008, putting tens of thousands of workers out of a job, but this is also what can happen when too much leverage props up dubious assets on Wall Street: the taxpayer can have a gun put to their head to bail out every major trading house on Wall Street; the government can have a gun put to its head to nationalize Freddie Mac, Fannie Mae, and the giant insurer AIG in order to bail out the derivatives of Goldman Sachs and its brethren on Wall Street; millions of Americans can lose their jobs and their homes to foreclosure; the Federal Reserve can be forced to push interest rates to zero to prop up asset prices, thus forcing senior citizens to get by on a lot less of a return on their CDs and Treasury notes; and because so much capital was wasted on toxic assets instead of flowing to the real economy, the U.S. is still living through subpar economic growth, which is preventing tens of millions of Americans from earning a livable wage.
The Fed’s Stability Report had this to say on leverage lurking at life insurance companies:
“Leverage of life insurance companies remained at post-2008 highs. Corporate bonds, CLOs [Collateralized Loan Obligations], and CRE [Commercial Real Estate] debt continued to account for a large proportion of life insurers’ assets. If these assets lose value, life insurers’ capital positions—and, hence, their ability to honor debt obligations—could be impaired.”
We really hate to mention this to the Fed, but the reason that the U.S. government had to rescue the giant life insurance company, AIG, in 2008 was because mega banks on Wall Street, supervised by the Fed, had tied a derivatives umbilical cord around their neck and the neck of AIG.
Nothing much has changed today. Large life insurance companies continue to be counterparties to Wall Street’s derivative trades.
Chuck again… Yes, thanks to the crooks on Wall Street, they almost brought down the U.S. financial system, and like Pam and Russ say, “nothing has changed”… And that’s scary if you ask me@
Market Prices 11/11/2021: American Style: A$ .7309, kiwi .7031, C$ .7957, euro 1.1465, sterling 1.3405, Swiss $1.0857, European Style: rand 15.2070, krone 8.6811, SEK 8.6988, forint 318.15, zloty 4.0369, koruna 22.0161, RUB 70.88, yen 113.96, sing 1.3540, HKD 7.7919, INR 74.35, China 6.3894, peso 20.54, BRL 5.4799, BBDXY 1,170.11, Dollar Index 94.98, Oil $81.74, 10-year 1.57%, Silver $24.99, Platinum $1,087.00, Palladium $2,142.00, Copper $4.50, and Gold… $1,857.30
That’s it for today… Well, I made it through the Webinar last night… Thanks again to Rich Checkan for offering me the opportunity to speak… I think of my Dad all the time, and today especially… He was a veteran of WWII… And never really talked about it much… I look at a picture of him, me and my little brother David, on the back porch steps that show how poor we were… So, I get to see him while he was still a healthy man, before cancer took him down to a weakened shell of the man he became, later in life… I was probably around 10 in the picture… So to all the veterans out there, thank you, from the bottom of my heart… My Billikens won again last night, not that there were any questions about them beating the team they played! They have one more game they should win, before they travel to Memphis next week to play The Memphis Tigers… A nationally ranked team… YIKES! Vince Guaraldi and his Trio take us to the finish line today with his song: Linus & Lucy… I hope you have a Tub Thumpin’ Thursday today, and please say thank you to a veteran… And then make sure you continue to Be Good To Yourself!
Chuck Butler