Flight To Safety Goes On, Then Off, Then On Again…

February 28, 2022

* Dollar buying is back on the table this morning

* What’s your alternative Thought on What happened to Gold last Thursday? 

Good Day… And a Marvelous Monday to you!… Today is Feb 28, the last day of February… It was also my sister Barbara’s birthday… Barbie doll, as I called her, she and I were only 1 year apart in school, so we were the closest of friends in our youth. I lost Barbie doll 4 years ago, to ALS, I miss you Barbie doll! Well, I’m full of you know what and vinegar this morning, so if you’re looking for some romantic, or serene writing from me today, you can forgetaboutit!   Pink Floyd greets me this morning with their mega hit song: Money… “But if you’re asking for raises, no surprises they’re giving none away”

When I left you on Thursday last week, Gold was up $60 on the day, due to the news that Russia had invaded Ukraine. And then it wasn’t up $60! By noon it has turned negative on the day. Wait! What? Yes, that’s right… and asset that’s up $60 on the day, lost it all, and then some, and nothing was to blame…  So, if you’re one of the few naysayers that still don’t believe in price manipulation of the metals, and well of everything else nowadays, then you tell me what the hell happened on Thursday last week? What’s your alternative answer to that? And believe me if you send one to me, I’ll publish it tomorrow! 

Now, I’m fully aware that a $60 point move upward is stretching things a bit, but at the same time Gold has been held back for so long now that I thought it was all that pent up frustration in investors, etc. that drove the price upward into the stratosphere… But it doesn’t mean that just because it may have moved too far, too fast, that it had to drop all of its gains, and go negative on the day!

You might be able to tell that I’m just a little ticked off there this morning, because not only did Gold lose ground on Thursday, it also lost ground on Friday! So… good friend, Aaron, sent me a text on Friday, and said, “tell me how Gold’s down, and stocks are up 700 points with a war going on?” I responded: Criminals, doing criminal things, selling Gold Short… Or, here’s another one for the folks to think about…

According to sources, the FOMC is now revisiting their plans to hike rates and taper more… Of course, I told you a week or so ago, that the Fed/ Cabal/ Cartel was lying to us about tapering, as they had continued to buy bonds, and print money even in the face of soaring inflation…  But the idea, one that’s a bad one I might add, is that the FOMC could use the war in Europe as an excuse to not hike rates or taper…   But here’s what would really be happening folks….  The FOMC has received their marching orders, and they include not hiking rates aggressively, and cool down on the tapering, and to us the war as an excuse…  Who told them that? Their bosses…. Aka Wall Street!

If Glass-Steagall hadn’t been thrown out the window, this wouldn’t be happening, because back in the day, Wall Street, was Wall Street, and Banking was banking, and Fed/ Cabal/ Cartel was in charge of keeping a stable currency (no inflation), and regulating the banks (auditing) But now that they’ve gone and incestualized the markets, the banks aren’t just banks any longer, they are Casino Banks that are owned by the Wall Street companies, and these Casino Banks make all the rules, folks… If they tell the FOMC to jump, the FOMC responds, How High?

Congress is to blame for this mess we’re in… with the Fed/ Cabal/ Cartel aiding and abetting Congress…  I have long chided the Fed/ Cabal/ Cartel for their misunderstanding the long-term effects of their stupid, moronic, monetary policies, and have left out Congress… Well, since nowadays the young folks all like to blame someone else, for they couldn’t have screwed up something, I’m going to join in and say it’s not my fault I let Congress slide, until now!

Ok, so on Friday last week calmer heads began to show up in the currency trading, and the dollar gave back most of its gains from Thursday. The BBDXY dropped over 5 index points to close last week at 1,179.61… On Thursday it had closed at 1,185.41… The euro, which had dropped to a price with a 1.11 handle, recovered back to a 1.12 handle, and all the other currencies, not named rubles, followed the Big Dog euro higher VS the dollar…  Gold as I already told you lost ground again on Friday to the turn of $14.50, to close the week at $1,890.00… Silver was able to eke out a gain of 7-cents on Friday to close the week at $24.57…

From the looks of all the asset classes on Friday, it appeared that the flight to safety had ended, just as quickly as it had begun… Strange, very strange, if you ask me…  The price of Oil on Friday drifted lower in, what appeared to be normal trading, and ended the week with a $91 handle. And the yield on the 10-year Treasury, which had dropped to 1.87% on Thursday, ended the week with a yield of 1.97%, so the rush to buy bonds had come to an end too… Was it all a knee jerk reaction to the news that Russia had finally invaded Ukraine? Too far, too fast? I believe that to be the case, and while I do believe that as we go along here, we’ll see more flights to safety, which may include the best safe asset of all, Gold…

In the overnight markets last night…  it was like Wayne and Garth street hockey game with the flight to safety (FTS),  FTS on, FTS off, FTS on…  and so on… Last night the dollar buying returned in force and the dollar surged to 1,185 again… And, last night before I went to bed, Gold was up $21… This morning, Gold is still up by $16, and Silver is flat…  The dollar buying did meet up with some resistance early this morning, and we start the day with the euro below 1.12 again, and the BBDXY at 1,183…  

The price of oil has jumped higher again and trades this morning with a $96 handle, while bonds got bought again last night, pushing the yield of the 10-year down to 1.91%…  Game on, Game off, Game on, Game off… 

Ok, folks, it’s time to tell you that the Russian ruble has fallen like a rock and trades this morning at 101.49…  That’s a far cry from the 70’s it traded at before the conflict began…  Liquidity is a problem for ruble assets right now, and it’s time for the Central Bank to step in to wrap a tourniquet around this bleeding in the ruble… 

I know, I know, a very long intro this morning, but…. I had to get that off my chest! Ok… I’ve got another thought for you all to think about, and maybe our lawmakers will hear listen to me now and hear me later, when I say that we need to rethink this idea of banning Russia from SWIFT… Why? Because, Russia receives their payments from their sales of Oil through SWIFT, If they can’t receive payment, then they quit sending Oil… Uh-Oh! Like I talked about last week… Unintended Consequences…  Now you could be in the camp that says, “so what? Make them suffer for what they are doing, no Oil sales are fine with me”…  And that would be OK, except… Russia supplies the world with about 9% of the global Oil needs…

And this was on Bloomberg. Com… “European leaders talking up plans to wean the continent off Russian natural gas are facing a harsh reality: Energy companies are buying more as the war rages in Ukraine.

Russian shipments through pipelines crossing Ukraine have surged to near the maximum level allowed under the transit contract, while some gas has started to flow again into Germany via a key pipeline running through Belarus and Poland.

The increase in purchases comes as European politicians are discussing how to retool energy policy in the wake of Russia’s invasion.”

So… what’s it gonna be boys? You either want Russian Oil, or you don’t! , and if the Russian Oil is so dependent on by Europe, what happens when Russia stops delivering them Oil? I so concerned about all this SWIFT stuff folks, that I’ve thought that it could lead to a World War…  Oh, and the ante was pushed higher this weekend, when Putin decided to alert his Generals about the possibility of a nuclear attack from the West…   All I’m saying about all this saber-rattling regarding SWIFT, is that I think it would behoove us to stop and think about the unintended consequences… That’s all I’m saying… 

Look… I’m not condoning what Russia did… In my mind, no country should invade another sovereign nation… 

The U.S. Data Cupboard last Friday, was the datapalooza that I talked about, so here’s the skinny on all those data prints last Friday: Personal Income for Jan. was flat 0.0%, and Personal Spending was up 2.1%… January Durable Goods were up 1.6%, and Capital Goods were up .9%… And here’s the data that really paints a picture, are you ready for this?  Mortgage applications last week, fell 10%, and 5.6% yoy… with refis falling 15.6% last week…  This is how it all starts folks… When demand begins to wane, the prices come down… And soon after, well, I suggest you check out the movie: the Big Short… to see what comes next…  I’m just saying…

The Data Cupboard this week is off and on during the week with some days having at least one economic print, and others have multiple economic prints. But it will all culminate on Friday, when the BLS’s Jobs report prints… You may recall that last month I laid the groundwork on what was going to happen with the BLS print, by saying that with the Jobs report printing negative for December, there’s no way the BLS will allow those negative prints to continue…   And… when it was all said and done, the BLS created 467,000 jobs… Yeah, right… And I fell off a turnip truck last night to believe those lies!   So… any way, the jobs jamboree takes place this Friday, March 4th

For What It’s Worth….  Last week a recent interview I did with Dennis Miller was sent out to his readers, and it was a very poignant interview, if I may say so, because it was with me!  So, if you want to read the whole thing you’ll find the interview here: What Does the Future Hold? – Miller on the Money

Or, here’s your snippet: “If the Fed pays lip service to inflation as Chuck suggested, inflation will continue to destroy the economy along with much of the wealth of the nation.

Can you and Chuck focus on ‘destroy much of the wealth of the nation?’ That seems like a subject the average Joe can get his or her head around. Why not put together what that would really look like for us?”

Chuck loved the idea! Let’s focus on what the Fed is telling us they plan to do.

This is opinion, at best an educated guess. It looks like times will become challenging.

The Fed created a HUGE stock market bubble. Hoisington Investment Management reports:

“…. Central banks expand liquidity but the inability of firms to profitably invest causes the velocity of money to fall but the additional liquidity boosts financial assets. Financial investment, however, does not raise the standard of living.

While the timing is uncertain, real forward financial asset returns must eventually move into alignment with the already present negative long-term real Treasury interest rates. This implied reduction in future investment will impair economic growth.”

Bursting the financial bubble – This Time IS Different For the average Joe, this means, Wall Street got richer, but not necessarily Main Street. Eventually the bubble will burst and revert to more normal market levels.

Legendary Investor John P. Hussman paints what lies ahead:

“We are fully convinced that these historic valuation extremes have removed decades of investment returns from the future….

I believe investors…may discover the hard way that a retreat merely to historically run-of-the-mill valuations really does imply a two-thirds loss in the S&P 500.“

What would a huge retreat in the market mean for the average Joe? What about 401k plans and those already retired?

I don’t like the negative tone – but…the Fed’s raising interest rates and discontinuing buying bonds is going to result in a market correction (S&P drops 66%?). Powell mentions a “soft landing”. Please explain.

CHUCK: Thanks again Dennis for this opportunity to opine…. The term soft landing has historically been used to describe how the Fed plans to cool down an overheated economy but not too much to depress it, thus providing a soft landing…

The Fed’s soft landing track record is not a good one folks…. In addition, Powell doesn’t have an overheated economy to combat inflation, at best, he needs to cool a lukewarm economy. So, to think things will be soft is a stretch of the imagination.”

Chuck again… As many of you know, Dennis Miller’s letter appears on www.milleronthemoney.com, but he would prefer that you sign up for the letter to come directly to you each week… So, go to the website and sign up!

Market Prices 2/28/2022: American Style: A$ .7215,  kiwi .6733, C$ .7842, euro 1.1198, sterling 1.3403, Swiss $1.0841, European Style: rand 15.4448, krone 8.8933, SEK 9.4824,  forint 329.89,  zloty 4.1828,  koruna 22.2742, RUB 101.49, yen 115.54, sing 1.3575, HKD 7.8141, INR 75.37, China 6.3094, peso 20.51, BRL 5.1525,  BBDXY 1,183.81, Dollar Index 96.10,  Oil $96.10, 10-year 1.91%, Silver $24.39, Platinum $1067.00, Palladium $2,547.00, Copper $4.52, and Gold… $1,906.40

That’s it for today… Well, we’ve just experienced a full week of days that were sunny and 80 at least! Yesterday, late afternoon, we experienced the first rain we had seen all week, and it came during the last two holes of the Honda Open, which is played right down the street from me!  Well, not exactly “right down the street”, but very close to where I am! March, which begins tomorrow, is a time, in the past, when St. Louisans come down for Sprint Training, especially during spring break week… Some people will still come down, but most will stay at home waiting for the baseball babies to decide to play ball… Good friends, Webbie and Lisa arrive tomorrow, and at least I’ll have one of my beer drinking buddies around! Rod Stewart takes us to the finish line today with his mega hit song: Maggie May, which was a song about an older woman that he lived with as a young teenage boy… Bet you didn’t know that!  So, I hope you have a Marvelous Monday today, and will Please Be Good To Yourself! Be Positive, Test Negative!

Chuck Butler