November 2, 2023
* the dollar get ambushed overnight…
* Gold marches toward $2,000 once again…
Good Day… And a Tub Thumpin’ Thursday to one and all! I don’t know if it was the cold weather, or the idea that I have that young adults, with children, don’t get into the tradition of Halloween, that only saw about 25 kids come to our house Tuesday night… It’s probably both, but it was darn cold out! I guess we’ll see if it picks up next year, eh? I got chastised the other day, when I went off on the cancellation of our history… That’s OK… I know I’m right! HA! Congrats to the Texas Rangers on their first ever World Series Championship! I have a good friend who made a bet on the Rangers so, I know he’s a happy camper this morning! The Cure greets me this morning with thier song: Lovesong…
Well, it was back to selling dollars yesterday, especially after the Fed Heads announced no rate hike… The BBDXY lost 3 index points yesterday, and the euro makes it march to 1.06 once again… I don’t know if it will get there right away, but eventually, it will become a thing of the past… Gold was up, down, up, down and all around yesterday, like it was doing the limbo… In the end, Gold was up down just 80-cents on the day at $1,983.50… Silver saw the same type of trading as Gold, and ended the day up 9-cents, to $23.02… I could have saved myself some typing there by just saying that Gold & Silver were basically flat on the day… But, I didn’t, so we move along… The price of Oil dropped a buck to an $81 handle, and bonds… OMG! What the heck happened here?
The 10-year’s yield dropped tremendously to 4.73%… And a lot of that move came after the FOMC announcement…. I think bond traders are putting the horse before the cart here folks… They are trading for what might happen 18 months from now… or even longer! The Fed Heads have tried to get it through the bond boys thick skulls that rates will remain higher, and for longer… That doesn’t mean just because the FOMC didn’t hike, that they are preparing to cut rates! And that’s what I saw in bond trading yesterday… I for one don’t see rates coming down until 2025… But then, that’s just my logical thinking once again…
In the overnight markets last night… the anti-dollar traders ambushed the dollar… The BBDXY is down 6 index points overnight, thus adding in yesterday’s 3 index loss, and you have 9 index points lost in the last 24 hours… I would say that traders and investors are not happy about the Fed Heads’ position, which is to not hike rates at the moment, but certainly not ready to even discuss, cutting them… This is about the time the PPT steps in to keep the dollar from falling even more… But no sign of them so far… But it is very early, folks… They, the PPT, like to loll around and relax… Gold is up $5 in the early trading this morning, and Silver is flat to down 2-cents… Gold is nearing in on the $2,000 figure once again, this is a real phycological figure, and any time it trades past the figure, it gets knocked on its rear and dropped below it… So, is this time the time we see Gold continue on to higher ground? Well, not of if the short Gold paper traders have anything to say about it… But demand for the shiny metal right now is growing to a very strong demand… That should keep the short paper traders on the sideline until they see any cracks in the strong demand, and then they’ll strike!
So… The FOMC left rates unchanged… That does not mean, they are ready to cut rates! Here’s chairman Powell words; “The stance of policy is restrictive, meaning that tight policy is putting downward pressure on economic activity and inflation, and the full effects of our tightening have yet to be felt.”
Hmmm… He also mentioned that the FOMC reserves the right to hike rates again, if inflation comes back… If I were in the room, I would have corrected him, and said, inflation never went away! But, I wasn’t, and that’s probably a good thing, or esle I would be spending the night in the hoosegow!
I don’t know about you, but, I’m getting the feeling that we, as a country, are getting our ducks in a row, to go to war… I sincerly hope not, because that would escalate things to a WWIII… But I can’t help getting these thoughts, from all that I read about what’s going on…
But wouldn’t that be just about right for end of our Empire? spreading our military, increasing spending, and having a population that just won’t work any longer? The same happened to the Mongols, the Romans, The Brits, and many other Empires through history… Our decline began in the year 2000… I’m just saying…
Ok, back to happy thoughts! My beloved Mizzou Tigers are getting 16 points on the betting line for their game VS Georgia on Saturday… While I don’t believe the Tigers will lose by more than 10 points, I’m very hesitant to make that call… They could, win… Now that would be something! And they have a chance to do so… A Chance, you’re telling me they have a chance? Slight, but a chance nonetheless…
And then… I guess Stanley Druckenmiller isn’t going to be sending Janet Yellen any Christmas cards this year… here’s why: Janet Yellen is behind the “biggest blunder” in the history of America’s Treasury, according to billionaire hedge funder Stanley Druckenmiller.
Druckenmiller—whose decades-long career has seen him build a net worth of more than $6 billion—slammed the Treasury Secretary during an on-stage discussion at last week’s Robin Hood Investors Conference, arguing that Yellen had failed to take advantage of the ultra-low interest rates era….
As if the Treasury didn’t issue enough bonds to finance our debt during that period, but I do get what he’s saying, that she could have issued more debt at zero rates, to ensure that we, as a country, didn’t have to worry about rising interest rates and bond servicing costs…
No worries, Stanley, Janet Yellen’s not on my Christmas Card list either!
Well… how did we get into this mess in the first place? Deficit spending, year after year, after year, after year, that’s how… I know you’re going to say, “But Chuck, you’ve been telling us worry about the mounting debt for years now, and it still hasn’t brought about the problems you spelled out, all those years ago”… And I would say, you are correct, except now we have to suffer for all of our past sins… This might not be the level of debt that collapses the financial system, but I can’t help thinking that the end isn’t far away… I mean in just the past three years, we, as a country printed more than $6 Trillion in new dollars, and that brought about the fastest rising inflation since 1979, and to combat that our Fed/ Cabal/ Cartel hiked rates 500 Basis Points, and now banks everywhere are having to deal with how this rising rate environment affects their bond portfolios… What’s next? Only the Shadow Knows, folks, but it won’t be good… I know that for sure!
This is when I wish the Pfennig Replies worked… Because I would like to know… Am I the only one that’s seeing this, as the beginning of the end of the Empire?
I read this morning that with yen breaching 150, (it was 151 yesterday), that the Bank of Japan (BOJ) is ramping up the intervention whispers… I say, go ahead BOJ, intervene, for it will only last one day, and then traders will get the feeling that it was a one and done, and get back to selling yen… So, go ahead BOJ… I double dog dare you!
And then there was this… last week, there were calls from Sweden’s Riksbank (central bank) , for a capital infusion of $6 Trillion… Wait… What? Yes, the oldest central bank is in trouble, because of the losses on paper in their bond portfolio… First last year, we had large U.S. banks fold because of that, and now we have a Central Bank on the ropes? Man, oh man… What’s to come next? Keep reading the Pfennig each day, to find out!
The U.S. Data Cupboard yesterday, had the ISM Manufacturing Index for Rocktober, and it was very disappointing! The index fell from 49.6 to 46! That’s a HUGE drop in the index folks, and says that manufacturing contracted in Rocktober… The ADP Employment report for Rocktober was only 113,000 jobs created in the month… I guess we’ll see how many hedonic adjustments the BLS makes to their surveys come tomorrow… Yes, tomorrow is a Jobs Jamboree Day… Oh Goody… NOT! In addition to the ISM yesterday, we saw the Job Openings remained at 9.6 Million, and today’s Data Cupboard has the Sept Factory Orders, and the stupid Productivity for the 3rd QTR…
To recap… The dollar got sold yesterday, as I guess the dollar bugs were upset that the FOMC left rates unchanged once again… Chuck thinks the bond boys have gotten way ahead of themselves… Gold & Silver couldn’t take advantage of the dollar selling and ended the day with both of them flat for the day… Stanley Druckenmiller has crossed Janet Yellen’s name off his Christmas card list… And Chuck talks about the end of our Empire… he believes it began to show wear and tear at the turn of the century, and now with a possibility of spreading our military around, will begin to push us toward the same fate as the Mongols, Romans, and Brits…
For What It’s Worth… Good friend, Dennis Miller of www.milleronthemoney.com sent me something yesterday to read, and while doing so, I noticed a different article that looked to be FWIW worthy… This is an article about how Quantitative Easing (QE) was good for stocks and QT isn’t good for stocks, and what do we find our Country is in the middle of right now? and it can be found here: Fed’s QE Giveth, Fed’s QT Taketh Away: Russell 2000 Hits 3-Year Low, Nasdaq Back to Dec 2020, S&P 500 Back to Apr 2021 | Wolf Street
Or, here’s your snippet: “There are some things happening in this inflationary world that contradict well-established previous wisdoms, including that stocks are a hedge against inflation. Turns out, since QE started in 2008, all prior wisdoms had to be thrown out the window, and the new wisdoms are all about QE and now QT: QE makes stocks go up, and QT makes stocks go down, no matter what inflation and the real economy do.
The Nasdaq Composite closed on Friday at 12,643, down 22% from the peak in November 2021, and back where it had first been on December 16, 2020. Despite huge gyrations, it has gone nowhere in nearly three years.
And the huge rally through July 2023, fired up by the Fed’s lightning-fast $400 billion in bank-panic liquidity injection, is threatening to turn into the biggest sucker rally ever. The problem is that the Fed then had quickly withdrawn the liquidity and followed up with record QT, now amounting to over $1 trillion.
The S&P 500 index closed on Friday at 4,117, down 14.6% from the peak on January 3, 2022, and back where it had first been on April 9, 2021
In other words, despite all these gyrations, it has gone nowhere in about two-and-a-half years. And the huge rally, driven by the Fed’s $400 billion in bank-panic medication, fizzled out at the beginning of August, and it been careening downhill QT Way.”
Chuck again…. Yes, it’s always good to touch on the stock market, not that I consider myself a stock jockey, or anything close to one, so it’s good to have someone else to do the talking… I’m just saying… Got Gold?
Market Prices 11/2/2023: American Style: A$ .6439, kiwi .5900, C$ .7242, euro 1.0633, sterling 1.2192, Swiss $1.1057, European Style: rand 18.4104, krone 11.1598, SEK 11.1190, forint 359.53, zloty 4.1941, koruna 23.1573, RUB 93.20, yen 150.33, sing 1.3638, HKD 7.8253, INR 83.25, China 7.3178, peso 17.66, BRL 4.9584, BBDXY 1,268.05, Dollar Index 106.11, Oil $81.61, 10-year 4.70%, Silver $23.04, Platinum $918.00, Palladium $1,109.00, Copper $3.65, and Gold… $1,988.13
That’s if for today, and this week of course! I’ll be writing to you next week from my winter home down south… I’m there for just 11 days… Good luck to my beloved Mizzou Tigers this weekend… Our Blues lost in Colorado last night… UGH! The season isn’t exactly starting out very good for the Blues… I hesistate to say that it’s a long season, because I kept saying that last spring when the Cardinals started to badly, and then never turned it around… So I won’t jinx the Blues like that! Well, my grandson, Everett, broke his ankle playing football last Saturday, and he’s scheduled for surgery next Tuesday… He’s a tough little guy… But that’s going to put the kyboshes on his wrestling season… Hopefully, he rehabs and is good to go by spring! Baseball season! I played football for many years, and had a high ankle sprain my junior year, and that’s it! So, I was lucky! Chicago takes us to the finish line today with this great 70’s song: I’m A Man… Chicago’s guitar player/ singer, Terry Kath, was in my opinion, the best lead guitar player of his generation. Terry Kath, died from a self inflicted gunshot too early in life… So Sad… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow! And please remember to Be Good To Yourself!
Chuck Butler