September 21, 2023
*currencies & metals get sold on Wednesday…
* Chuck thinks differently than everyone else… (like that’s news?)
Good Day… And a Tub Thumpin’ Thursday to one and all! Two days in the books for me being all by myself again, and no problems, so far… I don’t expect there to be any, but… Then again, I never, ever, even thought, that I would suffer a stroke, so there’s that lesson to be learned… Day game at Busch Stadium today, and I’m going to go! YAHOO! We’ll probably have to dodge some raindrops… reminds me of: “if all the raindrops were lemondrops and gumdrops, oh what a rain it would be”… Silly… I know, but I guess I’m in that kind of a mood this morning… The Moody Blues greet me this morning with the song: New Horizons… “Well, I’ve had dreams enough for one, and I’ve had love enough for three… Yeah that song…
Well, the FOMC left their powder dry yesterday, deciding that inflation had gone down by quite a bit (according to them), and that they are satisfied to stay pat for now… Here’s a snippet of what was said, ” At a news conference, Fed Chari Jerome Powell stressed the Fed has made no decision about whether to lift rates again and is no rush to do so.
“Given how far we’ve come, we are in a position to proceed carefully,” he said.
Powell said he’s pleased with how much inflation has come down but officials want to see a more sustained decline before concluding they can keep rates steady.
“We want to see convincing evidence that we’ve reached the appropriate level” of interest rates, he said. Noting that inflation has fallen encouragingly since May, he added, “We want to see that for more than just three months.”
Hmmm, I guess he didn’t see the data from last week that showed inflation had bumped higher in August, and was rebounding as we live and breathe… These guys they love to spin the words around so that they can get the message across that they want you to hear… Jerome Powell knows all too well that a higher inflation, helps to deal with the debt burden that he helped to create. He’s faced with a question of: Inflate or die… And it looks as though he’s going to go with the inflate way to die… I’m just saying
The dollar, which was down all morning, at least 4 index points in the BBDXY, turned around and rallied after the FOMC announcement… Why? I have no idea why, since it really sounded to me like the Fed Heads were finished hiking rates… But, these days, you never know what gets into these traders’ minds… So, the dollar rebounded yesterday afternoon, and ended the day at 1,254… up two index points from yesterday’s close, and up 6 index point from its low point of the day… Quite a turnaround, eh?
The PPT boys and girls must have been awakened from their slumbers and told that the dollar was in trouble, and that they needed to act… And act they did! The turnaround was something to see! Ed Steer, had a comment on the dollar index this morning, that I liked, here’s Ed: “If you believe for one second that dollar index rally came about because of free-market forces starting at 2 p.m. on the Fed news, I have a bridge for sale you may be interested in — and at a very good price.”
The currencies got hammered yesterday… The Big Dog euro, had to be taken to the vet, because it looked so sickly, and the other little dogs were left to be on their own, and they didn’t get the love they needed… The best performing currency yesterday was the Russian ruble! Go figure!
Gold had a nice gain going all morning, too, but then it didn’t, and had to struggle to finish the day down just $1.10, While Silver’s early morning gain was chopped down to just 4-cents… Gold ended the day at $1,930.80, and Silver ended the day at $23.32… Gold ended up being more than $18 off its high of the day… That took a lot of short paper trades to get it down to negative 1.10… I’m just saying
The price of Oil has lost $2 of its price since we last talked on Tuesday, and ended the day yesterday with a $90 handle… Still strong, but not AS strong… Nothing has changed in regard to the lack of supply, but I guess there comes a time when even the strong get knocked down for a bit… But here’s where I think the rubber meets the road with the price of Oil… the net long in speculative positioning is not yet at extremes. That means the price of Oil has the potential to run even higher, as the overbought position in Oil is not yet at extremes…
And the 10-year’s yield ended the day yesterday with a 4.40% yield… That’s the highest that the 10-year has been in a very long time! And shows to go ya, that without interference, where the markets will take yields… I’m just saying…
In the overnight markets last night… Well, the PPT got exactly what they wanted from their intervention in the dollar yesterday, and that was shown last night, as the overnight markets bought dollars like Tickle Me Elmos! The BBDXY has gained another 5 index points to 1,257 this morning… Gold is down $9 in the early trading, and Silver has given back 18-cents this morning. I’m so distraught this morning, because of al this intervention in the dollar and currencies yesterday… The short paper traders were egregious with their brazen trading, and just when I was beginning to believe that their power over the assets was waning… They proved me wrong, once again…
And somehow, the price of Oil has lost its edge it held earlier this week… The price of Oil has slipped to an $89 handle this morning… So, apparently, all that talk about supply issues that I chronicled previously, don’t mean a hill of beans… Stupid me… how could I get taken in on an fundamentals story? Oh well, we move along…
The 10-year has added some more yield to its 4.40% close yesterday, and this morning it trades with a 4.44% yield! I told you that these yields had no interference in them yesterday, but I have to amend that statement by saying that the Fed Heads with their talk about keeping rates here for longer than previously thought, was a way to interfere with bond yields, and so there you go!
I was reading Bill Bonner’s letter yesterday, and thinking all the while reading it, that he’s bang on with his thought that the Fed Heads will end up in a panic and decide to cut rates, and direct them lower, and try to make us all forget the “fight the inflation” verbiage…
I truly believe that interest rates will return to the downward trend they had been on since the early 1980s until around 2022, and that this return of lower rates will ignite inflation in a stronger form than it was before… Can you say” Uber high goods prices?” Well, you should learn to say it because from the looks of it, the Fed Heads have made their choice at the fork in the road and have decided to go down the inflation till we die, road…
The pundits that write about the markets are calling the FOMC announcement yesterday “A Hawkish pause”… Wait! What? I printed the statement above by Jerome Powell, how did they get that his words were “hawkish”? That’s what got the yield on the 10-year moving higher, and the dollar rebounding yesterday… The markets believe that Jerome Powell was sending smoke signals that rates will go higher… I’m sorry, I didn’t see this thought by the markets earlier, because to me it doesn’t have anything to back it up! UGH!
Am I the only person on earth that sees this for what it is? I shake my head in disbelief…
Well today, we’ll see if the Bank of England or the Swiss National Bank want to wet their powder… I think the Bank of England (BOE) will hike rates, and I’m not sure one way or the other with the SNB… But we won’t have to wait long to find out, as they will be making their announcements not long after I hit send this morning, and you’re reading the letter… The problem with a rate hike as far as the respective currencies are involved, is that the traders don’t give credit to a currency any longer for having increase its interest rate… These are the days when a Central Bank would hike rates, and the arbitrages would start taking one currency over another that didn’t hike rates… But those days are over, as a currency’s value is now all about Trader Sentiment, who may are may not pay attention to the fundamentals of a country’s currency…
The POTUS and the leader of Ukraine, both stood before the UN this week and asked the world to stand with them against Russia… Sure, but does that standing with them require Billions of dollars to be spent in doing so? Billions of dollars that we don’t have to spend? Oh, that’s right, if we need more cash, we can just have the Treasury fire up the printing presses… (Ok I know that they don’t use printing presses for the Billions that get sent overseas… it’s just an image that I don’t want to lose)
And besides the deficit spending that’s an issue here, the other thing that’s going on is reported by Reuters: “China urged increased cross-border connectivity with Russia and deeper mutual trade and investment cooperation, as both allies vowed ever closer economic ties. With the war in Ukraine well in its second year and Russia under Western sanctions, Moscow has leaned on its ally Beijing for economic support.”
How’d we get into this situation in the first place? Why were we responsible for Ukraine’s protection? Oh, that’s right, we put their leader in place, and then talked them into becoming members of NATO, which has been the red line for Russian leaders since WWII… That see Ukraine as an entry to their country, in an invasion, and that’s not what they’re going to stand for.. But the media in this country tells the story differently, and they place all the blame on a mad man in Russia… Well, both are at fault now, and if would behoove the to sit down and iron out differences before this spills into WWIII… I’m just saying…
The U.S. Data Cupboard gets back into action today, with the Weekly Initial Jobless Claims, which surprisingly have been weak lately, when one would think that the claims would be growing, but then that thought comes from someone that thinks logically… The other data piece today to bear arms, is the Leading Indicators, which have been negative for months now, and I don’t see any reason for it to change in August…
To recap… The dollar rebounded yesterday after the FOMC announcement that they were keeping rates on hold, and Chuck was in disbelief of what he was seeing, until it occurred to him that the markets got the FOMC’s statement all wrong… They seem to believe that the chairman’s words were hawkish… Chuck didn’t see it that way and gives you his thoughts on where this is going to lead… Yeah, you better go back and read that, if you skipped over it!
For What It’s Worth… Well, I’ll end this week with this uplifting note from zerohedge.com… (NOT!) This is all about how this fellow is calling the international debt a “Ponzi scheme”… And it can be found here: The Coming Collapse Of The Global Ponzi Scheme | ZeroHedge
Or, here is your snippet: “As economist Herbert Stein once said, “If something cannot go on forever, it has a tendency to stop.” Case in point: fiat money political regimes. Interventionist economies of the West are in a fatal downward spiral, comparable to that of the Roman Empire in the second century, burdened with unsustainable debt and the antiprosperity policies of governments, especially the Green New Deal.
In the global Ponzi scheme, thin air and deceit substitute for sound money. As hedge-fund manager Mitch Feierstein wrote in Planet Ponzi, “You don’t solve a Ponzi scheme; you end it.” Charles Ponzi and Bernie Madoff
…made some of their investors a whole lot poorer, but the world didn’t come crashing down as a result.
For that—for a Ponzi scheme that would threaten to bankrupt capitalism across the entire Western world—you need people much smarter than Ponzi or Madoff. You need time, you need energy, you need motivation. In a word, you need Wall Street.
But Wall Street alone doesn’t have the strength to deliver a truly cataclysmic outcome. If your ambition is to create havoc on the largest possible scale, you need access to a balance sheet running into the tens of trillions. You need power. You need prestige. You need a remarkable willingness to deceive. In a word, you need Washington.
As Gary North wrote in a brief review of Feierstein’s book, “The central banks have colluded with the national governments in order to fund huge increases of national debt, beyond what can ever be paid off. In other words, [Feierstein] has described government promises as part of a gigantic international Ponzi scheme.”
In a recent interview, Peter Schiff, who was laughed at when he predicted the economic meltdown of 2007–9, said interest on the federal debt alone “will be about a trillion by the end of this year. By the end of next year [it will reach] two trillion dollars—and that’s if interest rates don’t go up. . . . This is a huge debt bomb that’s going to explode.”
Chuck again… Yes, nothing new here from what I’ve been telling you for years, but as always, it gets spun a different way, and so now you’re aware!
Market Prices 9/21/2023: American Style: A$ .6405, kiwi .5913, C$ .7405, euro 1.0642, sterling 1.2276, Swiss $1.1037, European Style: rand 18.9308, krone 10.8144, SEK 11.1881, forint 360.02, zloty 4.3440, koruna 22.9575, RUB 95.83, yen 147.88, sing 1.3683, HKD 7.8214, INR 83.09, China 7.3056, peso 17.15, BRL 4.9005, BBDXY 1,257.58, Dollar Index 105.58, Oil $89.17, 10-year 4.44%, Silver $23.18, Platinum $919.00, Palladium $1,252.00, Copper $3.71, and Gold… $1,921.13
That’s it for today… And tomorrow of course! A tie last night at City Park, for our StL City team. Last week the team tied Houston in Houston, and a tie on the road sure feels better than a tie at home… I’m just saying… There are only two more home games, of which I have tickets for both… I was searching all over the internet yesterday for some good/ reasonable seats for today’s day game… I’ll try again this morning, thinking some last minute bargains might be had… My beloved Cardinals are limping to the goal line of the season’s end… All the fans ask for is for the team to play every game competitively till the end… It’s a good thing the Cardinals are not heading to the playoffs this year, as injuries late this year, have really reduced their ability to compete… The Construction people were supposed to have shown up here yesterday to begin work on rebuilding the inside of our house….. They didn’t show up, and I sat here all day waiting for them! UGH! Oh well I’m not waiting today, I’m going to the day game at Busch! Bob Seeger and his Silver Bullet band take us to the finish line today with their great song: Turn the Page… This song was written in the 70’s, and reminded me of my time “on the road”… I hope you have a Tub Thumpin’ Thursday today, and please, Be Good To Yourself!
Chuck Butler