August 23, 2023
* currencies get sold in the overnight markets
* All this debt… What will it bring us?
Good Day… And a Wonderful Wednesday to you! My oh my, what an awful year for my beloved Cardinals… They lost another game last night, in another rout to the Pirates… The game got so bad that late in the game I turned if off and turned on the Toronto/ Baltimore game… There, real baseball was being played! I’ve been having a lot of problems with my prosthetic eye… I guess I’ll have to go back to the ocuist and get it polished, and adjusted, I just dont’ know when I’ll have time to do that… I guess I’ll make time, eh?! One of my all-time faorite songs is playing for me this morning as Earth Wind & Fire greet me this morning with ther song: September… That song will get you dancing in your seat in a NY minute…
Well, I said yesterday that it appeared that the markets were already getting into their “lets wait to hear what Jerome Powell has to say on Friday”… The dollar saw some buying early, but when the dust on the day settled, the BBDXY was unchanged at 1,238… So, my fears of this already happening, a wait-n-see attitude for the markets, appear to be in place… Oh, Goody, where can I find some more of this no movement in the markets? The price of Gold started the day up $6, and as the morning started the short paper traders appeared once again, and took Gold down to negative territory… But Gold fought back and ended the day up $2.70 to end the day at $1,898.20, while Silver traded steady on the day closing up 9-cents to $23.45
The price of Oil seems to be stuck in the mud, at $80… And whenever that happens, I always say, hey! That’s better than losing ground! And the 10-year’s yield ended the day at 4.30%… I read yesterday, that the spread between the 10-year and the 30-year (the long bond) just keeps widening… So that means there are less buyers of the long bond, than there are of the 10-year bond…
In the overnight markets last night… Someone went off the schedule, and started buying dollars… And the buying of dollars didn’t end, so we start today with the BBDXY up 4 index points, the euro falling through the 1.08 handle, quickly, and all the other currencies, sans pesos, taking it on the chin this morning… What gives with this sudden burst of dollar buying, when it had appeared that everyone was on the sidelines for the next couple of days? I couldn’t find rhyme or reason for the buying, and so… you know what that always leads me to believe, right? Oh, you don’t? Ok… whenever we see these big runs in one session by the dollar, the PPT’s fingerprints are always left at the scene… So, there’s that to think about…
The price of Gold is up $6 in the early trading this morning, and Silver is up 38-cents. I read a short piece of Bloomberg.com this morning that said that in a poll of investors they have decided to hold onto Gold as the Fed’s rate hike cycle is almost over… Of course, if they had asked me, I would have said, I’m holding onto my Gold because it’s part of my net worth! And I’m not selling!
The price of Oil has slipped below $80 again overnight, and trades this morning with a $78 handle… Back and forth, back and forth… I have nothing else to say about this… And the yield on the 10-year slipped to 4.28%, but that’s just a temporary adjustment in my opinion, and when I say temporary, I sure don’t mean the temporary that Richard Nixon used when he took Gold from the backing of the dollar… This is a good story that would make a good movie, because his plan was to really be just temporary, and there were efforts to bring Gold back, but they were half-hearted attempts, and they failed of course, and 52 “temporary years” later… The damage has been done to our future… I’m just saying…
Well, remember two weeks ago, when Fitch lowered the U.S. Credit Rating, and I told you that this was not the end of the downgrades? Yesterday, it was reported that S&P had downgraded several banks… Moodys had already done that previously… So, everyone’s balance sheet looks awful… What it going to take to get them to shore up the books? Well, in a roundabout way… The debt spending needs to stop, and a plan for reducing the debt needs to be brought on board… That way the issuance of Treasuries would slacken, and that would go a long way toward helping the banks that are forced to own the Treasury bonds…
The thing that scares the bejeebers out of me is when we begin to see more bank fail… We could see the remaining banks do a Bail In…. We all know that our credit balances in the bank isn’t really our money, right? it’s a loan that we make to the bank and they pay us interest (well, some of them do) So, what’s to stop them from going down the list of depositors and checking off all clients with more than the FDIC amount of $250,000 per SSN, and then just moving the amount of excess out of the account and into their reserves… And Voila’ the bank’s balance sheet problems are a thing of the past…
Now, I don’t know any more than you do about if this is going to happen, if it’s even being discussed by bankers, or anything more… I’m just saying that this scenario is available to the banks, and they could very well institutionalize it….
Now, that’s scary, isn’t it? Because, to me, this sets a very bad precdence, an if they get away with it on the Big Balance Accounts, what would stop them from going after any amount? Ok, I’m going to stop now, because…
This news was music to my ears… From Bloomberg.com “The former head of JPMorgan Chase & Co.’s precious-metals desk and his top trader today were sentenced to prison for spoofing, fraud, and attempted market manipulation.
Michael Nowak, who ran gold and silver trading at the bank, and trader Gregg Smith were sentenced in Chicago by U.S. District Judge Edmond Chang. Nowak received a term of one year and one day while Smith was given two years, the stiffest sentence yet in a recent government crackdown on questionable trading practices.”
Chuck again: Someone finally had the intestinal fortitude to send one of these thieves to jail… Maybe, just maybe, any traders still taking part in manipulating the markets this way, will stop, being in fear of jail time…
I mentioned above about how the debt in this country is completely out of hand, and will be north of $44 Trillion in four short years…. So, if you think the Treasury is finding it difficult to place the Tsunami of bonds that’s being issued now, imagine in 4 years, we’ll have $12 Trillion more to have to finance…
But, I’m questioning whether or not we actually get to 4 years out, before the whole shootin’ match collapses! Debt Cycles that turn into debt bubbles, like this one, have historically collapsed under the weight of the debt, causing runaway inflation, an implosion of assets… All I know that is that this will happen… What I don’t know is when… That’s why I always ask the question: Got Gold?
And the jaded side of me is coming out again now, so if you don’t want to subject yourself to my shade of jade, then skip ahead… OK… everyone with me that wants to be here? So, have you heard about this new variant of the COVID virus? I believe the name of it is: Eris…. and it’s becoming widespread in the U.S. and wouldn’t you know it the new updated virus shots will hit the streets next week! And to top it all off TSA officials have admitted that they were told that everyone would be back to wearing surgical masks again by next year… Do, you mean to tell me that the people of the U.S. will bow to these jackwads again and shut down? I just don’t see us complying this time, do you?
Ok, you can come back now, As the Good Witch Glinda said, “it’s safe to come out now”…
The U.S. Data Cupboard is still lacking any real economic data today, but it show us the color of the latest New Housing for July… And the S&P flash PMI’s will print… These are just a flash report, they won’t move the markets any at all…
To recap… Chuck’s fears of us going into a wait-n-see attitude in the markets played out yesterday, with no movement in the BBDXY or Oil, and Gold was up barely…But someone went off script last night and the dollar rallied… Chuck really gets into some scary things this morning, he just have gotten up on the wrong side of the bed! And he showed his jaded sided once again…
For What It’s Worth… I sure hope every reads this FWIW article today… This is from Ron Paul’s newsletter, that was posted by Lew Rockwell, and it’s about the debt, and our future with both parties playing into the more debt picture… This article can be found here: Growing US Debt Menaces Liberty and Prosperity – LewRockwell spoiler alert… this snippet is a long one…
Or, here’s your snippet: “Congress’ top priority this fall will be passing legislation funding the government and avoiding a “shutdown.” As of this writing, it appears unlikely that the Republican-controlled House will be able to make a deal with President Biden and the Senate Democrats on a long-term spending bill. Instead, they will likely pass a short-term funding bill to give themselves more time to reach agreement on a longer-term bill.
Any bipartisan agreement is unlikely to reduce government spending or begin to pay down, or stop the growth of, the over $32 trillion national debt, which the Congressional Budget Office projects will grow by at least $115 trillion over the next thirty years. Instead, Congress and the administration will continue to pretend they are addressing the spending problem by “reducing in the projected rate of spending growth,” and other gimmicks.
The sad fact is both parties, along with a majority of the American people, are addicted to welfare-warfare spending. What little resistance there is to big government within the Republican party is likely to be further weakened by the rise of a new form of “conservatism” that advocates the use of government power—including deficit spending and increasing the federal debt — to advance conservative political and social goals.
The failure to take seriously the threat to the American economy caused by reckless federal spending is illustrated by the reactions to the credit rating agency Fitch’s downgrade of the US government’s credit rating. Instead of treating it as a wake-up call, government officials like current Treasury Secretary (and former Federal Reserve Chair) Janet Yellen dismissed the downgrade as “arbitrary and based on outdated data.”
One reason Yellen and others may be so blasé about the federal debt is that they believe the Federal Reserve will bail the government out by holding interest rate low enough to keep the federal government’s interest payments to manageable levels This is why, even though the Fed has been raising interest rates, the rates remain well below what they would likely be in a free market. However, the Fed knows it cannot go back to keeping rates at or below zero without causing price inflation.”
Chuck again… I’ve always admired Ron Paul, and thought he got the stiffed by the powers that be, when he ran for President… No way, a person with his credentials could be our President! That would make too much sense!
Market Prices 8/ 23/2023: American Style: A$ .6417, kiwi .5930, C$ .7367, euro 1.0808, sterling 1.2620, Swiss $1.1348, European Style: rand 18.7098, krone 10.7098, SEK 11.0122, forint 354.61, zloty 4.1413, koruna 22.2171, RUB 94.26, yen 145.54, sing 1.3583, HKD 7.8403, INR 82.69, China 7.2908, peso 16.89, BRL 4.9319, BBDXY 1,243.27, Dollar Index 103.96, Oil $78.38, 10-year 4.28%, Silver $23.86, Platinum $939.00, Palladium $1,317.00, Copper $3.77, and Gold… $1,904.50
That’s it for today… The sun finally made an appearance yesterday, burning off the strange air that was in our atmosphere for 2 days… I told Kathy, that it could be the wild fire Canadian air causing the ugly days, they did tell us that they, (the wild fires) would begin to mess with our air soon… Well, it was a hot one, like 7 inches from the midday sun… And I love it! I went out side to water my wife’s flowers, and my eyeglasses fogged all up… I had to take them off so I could see what I was doing! Two days ago, it got to 102 and I sat outside to read, telling Kathy, that I was going out to see what 102 felft like… I’m just glad that I’m not 18 and building in-ground swimming pools in Oklahoma any longer! The poor folks that HAVE to work out in the heat… They have it rough… for sure! Well, The Searchers take us to the finish line today with their great 60’s song: Love Potion Number 9…. This is another of my all-time fave songs! I hope you have a Wonderful Wednesday today, and please oh please, with sugar on top, Be Good To Yourself!
Chuck Butler