July 18, 2023
* currencies and metals rally in the overnight markets
* China’s economy slows down, what’s next?
Good Day… And a Tom Terrific Tuesday to you! I apologize for the tardiness of the letter yesterday… I had some technical problems that needed to get fixed before the letter could get sent out… Well, this is it for two weeks, you know… you can always go to the website: www.dailypfennig.com and read the archives… That is if you just need a hit of Chuck! I would laugh there, but this is serious stuff, folks! My beloved Cardinals won their first of 3 against the Marlins last night, I had a full crew here to watch the game outside with me, but only Rick B. stayed till the end… I’m very tired this morning, and dragging the line, so this won’t be long… Eddy Money greets me this morning with his song: Baby Hold On… I have a few Eddie Money songs on my iPod, as he was quite famous in the 80’s…
The dollar was drifting along yesterday not a lot of buyers or sellers, until the end of the day, when the sellers out yelled the buyers and the BBDXY lost 1 index point.. No biggie, and a day that shouldn’t have brought about much buying and selling, didn’t… I have to apologize to you dear readers for telling you that the this Wednesday was the FOMC Day.. I was a week ahead! What a dolt! Oh well, the FOMC will meet next Wednesday, and nothing has changed toward the markets feeling that the Fed Heads have made their last rate hike… The bonds tell us that the last rate hike has been made, the stock jockeys tell us that the last rate hike has been made, and the dollar bugs told us last week the last rate hike has been made… You know I told you yesterday, that I learned early on in my career that when everyone is on one side of a trade, to take the other side… But, for once in my life, I’m not going to go out on a limb here… As I told you yesterday, I’m thinking that the Fed wont want to lose credibility and not follow thier so-called “skip” with another rate hike… So, like I said yesterday, we’ll have to wait-n-see…
Gold ended the day basically flat, up 20-cents on the day, to close at $1,955.50, while Silver ended the day down 10-cents to close at $24.86… A day of non movement, after all the big moves last week, doesn’t surprise me in the least… But if rain drops were gum drops… I would have liked to see Gold continue to move forward, and I don’t think 20-cents is moving forward… Ted Butler (no relation that I’m aware of) issued a Red Alert, on Silver pointing out some events that are startling to someone that has followed Silver movements for decades… Silver will either break out to the upside, or move downward… I know, what help does that give us? Well… you can either take a flyer on one side, or stay on the side lines on the other side… That’s what makes markets folks… buyers and sellers.. not short paper traders and thier price manipulations… I’m just saying…
In the overnight markets last night… Thg dollar got sold, but not huge amounts, the BBDXY has lost 1.5 index points overnight, and start this morning at 1,200…. The currencies are moving cautiously higher VS the dollar… I say cautiously because we all know, so they all know, that the PPT and their treasure trove of Exchange Stabilization Funds (ESF) are lurking in the dark alley, waiting for their opportunity to strike… The old Dollar Index has fallen below 100 and stayed there, which is an indication that this dollar selling isn’t going to stop soon… Gold is up $8 in the early morning trading today, hitting a 4-week high… Gold has a couple of things going for it these days, and the key one is the weakness in the dollar. That, and the market’s mindset that rate hikes in the U.S. are over… Silver is up just a few pennies this morning…
The price of Oil is trading with a $74 handle this morning, and the firmer price in Oil in recent times, has also helped the rally in Gold.. A stronger Oil price, means that inflation isn’t going anywhere soon… Speaking of inflation… The other day I saw a chart of the items that make up the inflation basket, and energy prices, were the big negative numbers to inflation… But that chart was taken when Oil was below $70… So, in other words, as the price of Oil rises, so does inflation… I don’t believe the markets are taking this firming of the price of Oil into consideration, when they think that the rate hikes in the U.S. are over…
Besides… the Fed/ Cabal/ Cartel’s preferred inflation measure, which isn’t the Stupid CPI, but instead it’s the PCE, and it’s still 4.6%… So, you can go all in on the markets’ call using the stupid CPI, or… you can be cautious with the PCE… BTW PCE is short for Personal Consumption Expenditures… Bonds continue to get bought, and the yield on the 10-year has dropped to 3.75%…
One thing that’s weighing on the markets this week is the report over the weekend that China’s economy slowed almost to a snail’s pace in the 2nd QTR… Here’s Reuters: “China’s economy grew at a frail pace in the second quarter as demand weakened at home and abroad, raising pressure on policymakers to deliver more stimulus to shore up activity. GDP grew just 0.8% in April-June from the previous quarter, compared with a 2.2% expansion in the first quarter.”
Chuck again… Well, we had all heard that China’s optimism over their reopening their economy, had slowed, but by how much, and now we know… Consumer spending was really down in China, and that is a large piece of GDP, that has taken a huge downward step…
China is need of a stimulus, unless they want to let things run out the way they will, in which case they’ll be in a major recession, of which if my opinion, if that’s what the economy calls for, then let it run, and you’ll wipe out the excesses of the boon, and get you ready for the next run up… So, what will China decide? There is a difference between China administering stimulus and The U.S. doing the same… One country does it from a position of strength in their balance sheet, and other country goes deeper into debt… I’m just saying…
Could we see the difference in Central Bank direction next week when the FOMC meets, and so does the ECB (European Central Bank)… I know for sure, at least I’m pretty sure that the ECB will hike rates next week, and I’m somewhat sure that the FOMC will not hike rates… But then the FOMC has always has a penchant for disappointment, and with the markets all-in on their thought that the rate hikes are over, and rate hike would really upset their apple cart… And of course be disappointing to the markets…
The U.S. Data Cupboard today has the BIG 3… Retail Sales (for June), Industrial Production, and Capacity Utilization.. The Butler Household Index (BHI) indicates to me that Retail Sales will be meh… Industrial Production has been negative in recent months, so it’ll be interesting to see if it can climb out of the red…
To recap… The dollar drifted most of the day on Monday and at the end of the day saw some selling that didn’t amount to much, with the BBDXY losing 1 index point on the day… Gold was flat , and everything else was pretty much unchanged on the day… Chuck was showing his doltness yesterday, talking about how the FOMC met this Wednesday, when it actually meets next Wednesday… The euro remains above 1.12, and has come a long way baby… in recent weeks… And Chuck talks about China’s economy…
For What It’s Worth… This article talks about a Debt Explosion and how it could happen and how fast it could occur… And it can be found here: A CATASTROPHIC DEBT IMPLOSION CAN BE INCREDIBLY QUICK – Matterhorn – GoldSwitzerland
Or, here’s your snippet: “So all the Western leaders got together for the NATO meeting in Vilnius, Lithuania last week to listen to Zelensky’s rantings about more money and more weapons in a war that Ukraine is unlikely to ever win. But since this is a proxy war for the real battle between the US and Russia, the West is grudgingly giving in to many of Zelensky’s demands, thus escalating the war to levels which could have catastrophic consequences for the world.
This war could at best lead to 100s of thousands of additional deaths. The Ukrainian people don’t want war, probably more than 10 million of them have left the country and won’t return. Neither the Russian, American or European people want war, only their leaders. When it comes to wars, leaders have ultimate power and also access to money. Although no country has funds available for this war, they all borrow and print to the detriment of the countries and their people.
At best this war will be limited but go on for years at a massive cost of lives and resources. At worst we could have a global and nuclear war with disastrous repercussions.
Western leaders would serve their people much better if they instead sent peace makers and focused on their economies which are on the verge of a major implosion.
Coming back to debt, this is what will finally destroy the West and likely lead to decades of misery.
The latest financial crisis started in September 2019 when the US banking system came under serious pressure and the Fed injected major liquidity into the near bankrupt system. Since that time, total US debt has increased by $21 trillion.
Let’s put this into perspective. It took the US 221 years to go from Zero debt in 1776 to $21 trillion in 1997 and just in the last 4 years, debt has gone up by that same $21 trillion. “
Chuck again.. A very long article of which I only have a piece of for you here… If you have the time, please click the link above and read the whole article that even talks about Dante’s 9 circles of hell…
Market Prices 7/18/2023: American Style: A$.6802, kiwi .6282, C$ .7542, euro 1.1254, sterling 1.3107, Swiss $1.1659, European Style: rand 17.9328, krone 10.0715, SEK 10.2076, forint 332.32, zloty 3.9525,
koruna 21.1818, RUB 90.74, yen 138.26, sing 1.3213, HKD 7.8192, INR 82.05, China 7.1792, peso 16.73, BRL 4.8073, BBDXY 1200.57, Dollar Index 99.74, Oil $74.41, 10-year 3.75%, Silver $24.90, Platinum $980.00, Palladium $1,300.00, Copper $3.81, and Gold… $1,963.17
That’s it for today… For this week, and for the next two weeks… Some timely hitting won the game for my beloved Cardinals last night. Something they had been lacking all season long, and would behoove them to retain that edge to finish out the season.. I can’t believe that I got so far ahead of myself yesterday, with the date of the next FOMC… Sorry again, about that! If I could read Pfennig Replies, I would expect that many of you pointed out that error on my part… Man was I decadent last night with regards to what I ate… But every now and then it does me some good to eat like that again! Now, I’m heading to S. Florida again, where I’ll be eating seafood all the time! But every now and then, I’ll opt for a cheeseburger! Elvis Presley takes us to the finish line today with his song: One Night With You… Whenever I hear an Elvis song, it reminds me of my late good friend, and almost brother, Frank Weiler, who loved Elvis and had every album he ever made… I hop you have a Tom Terrific Tuesday, and great time while I’m gone… And please Be Good To Yourself!
Chuck Butler