March 7, 2022
* The dollar is on a rampage, and has gained a large amount
* Commodities continue to surge in price…
Good Day… And a Marvelous Monday to you! Who’s Who’s peekin’ out from under a stairway, Calling a name that’s lighter than air? Who’s bending down to give me a rainbow? Everyone knows it’s Windy… Apologies to the Association for using their lyrics, but Friday brought us very windy conditions down here in S. Florida, and the wind stayed with us all weekend… The ocean was very angry, but the sun was shining, and if you could find a wind break, it was a great weekend! My St. Louis U. Billikens won their Senior Day game on Saturday, and my beloved Missouri Tigers won their game, believe it don’t, on Saturday… Next Sunday is Selection Sunday, and then all the brackets will be distributed at workplaces, and no one will get anything done while they contemplate their bracketology …. King Crimson greets me this morning with their song: In the Court of the Crimson King… A rock classic for sure!
Well, last Friday was a hum dinger of a day for the dollar… The BBDXY Gained over 6 index points to close the week at 1,194.89… The Russian ruble got whacked some more and ended the week trading with a 122 handle… And the euro, the offset currency to the dollar, got whacked too, with all the dollar strength prevailing in the markets on Friday, the euro fell below the 1.10 figure, if it sees another day like Friday today, it will trade blow the 1.09 figure! I saw one report over the weekend that said that the euro was in danger of falling to parity with the dollar… Well, that hasn’t happened in 22 years, so this would be a first for this century, if that would happen.
Usually, in the past that is, when the euro has been on the chopping block, it finds a bottom and then reverses its course. I’m not so sure that will happen this time, as the European economy is at risk from the sanctions on Russia… So, we’ll see, eh?
The Commodity currencies are soaring higher, Hmmmm, imagine that, I wonder who it was that wrote that the Commodities would be rising in price, and therefore so too would the currencies that backed the Commodities…Hmmm… I do believe that I’ve heard those words before… I wonder who it could be?
The Aussie Dollar (A$) had just passed 73-cents Thursday morning, but ended the week trading .7377… And kiwi added over 1-cent to its price since Thursday and ended the week trading .6863… the Brazilian real ended the week trading 5.06… and so on…
Speaking of Commodities… Gold soared on Friday by $36.40, to end the week at $1,973.90, and Silver gained 66-cents to close the week at $25.83… Both these metals had gained on Thursday to, but not to the degree they rose on Friday! this run up in the price of Gold was very strange as it happened on a Friday, when the price manipulators make sure the weekend price is lower, so people on the fence of buying Gold, will see that it goes nowhere… But not last Friday… Where were the price manipulators? Well, they were active, and both metals could have risen further on Friday, but the physical demand for the metals drowned out the short trades, and gave us an idea of what could really happen if the price manipulators were pushed out of the markets…
The price of Oil continued its march to higher prices on Friday, gaining $3 to close the week at $115.. Last night, Oil was already up another $10 to trade at $125.00. Crazy folks… Do you recall what year it was the Oil last reached $125? Ok, I’ll tell you… It was 2008, in July… and then it was coming back down from reaching a high of $160… So, $125 is not a record, but it’s pretty darn high for a barrel of West Texas Intermediate… And that’s not the only Commodity reaching for the stars… I read this weekend that Wheat had hit an all-time high…
In the overnight markets last night… the raging dollar continue to be bought up by the bushelful… The euro has indeed fallen through the 1.09 handle and trades with a 1.08 handle this morning, and the Russian ruble has been sold further down the river and trades this morning with 137 handle… The BBDXY has risen another 5+ points this morning and is trading as I write, at 1,200.62… The Aussie dollar, and kiwi are the two currencies bucking this dollar strength, and the A$ has climbed past 74-cents this morning, with kiwi following up to .6885…
But the dollar strength has crossed over to all currencies, whether they associated with Europe, or oceans away… The Chinese renminbi has also bucked the dollar strength trend and trades this morning at 6.3200.. And the Swiss franc just keeps holding on to 1.08… So, there are the 4 currencies that are keeping the strong dollar at bay… Other than those 4, it gets pretty ugly out there, folks… I’m not one to give the dollar credit for things, but this time, I do have to say that the dollar’s run has been impressive, unwarranted, given the dollar’s fundamentals, but nevertheless, impressive…
Gold has climbed above $2,000 on two different occasions overnight, first climbing to $2.004, before being brought back down, and then to $2,005, to where it’s trading now at 1,991… This is called testing the water, and when this happens the asset that’s doing the testing, will move higher than fall back, and do this a few times, to a point where Traders either decide that the move higher is warranted, or not… I’m in the camp that says that Traders will begin to get the idea that Gold needs to move higher, and that will be that!
The price of Oil has slipped a bit from last night’s price and trades this morning with a $123 handle, while bonds are still bought and then sold, bought and then sold… To me, it’s a case of the Fed/ Cabal/ Cartel seeing the selling and decides to buy, bringing yields back down, only to see the selling persists, and them having to keep coming into the market. The 10-year has a yield this morning of 1.77%…
All weekend long, just about every news story was about the war in Ukraine… With the Russian ruble falling like a rock that’s been kicked off a cliff, one has to wonder what was on Putin’s mind prior to the invasion… Did he think that his country’s stash of Physical Gold, and their reserves would be enough to support the ruble during this war? Because they sure haven’t been one lick-o-help! I’m sure that’s what he thought, and he was wrong… The ruble gets sold daily, and by large chunks… People that live in Russia can’t get on trains, can’t use their Visa or Master Cards, and all financial transactions are up in the air… If they weren’t so “controlled” they would be storming the gates right now…
I mentioned above about the price of wheat hitting an all-time high, and then G. Edward Griffen sent me this note in his www.needtoknow.news site, “Ukraine and Russia are two of the world’s major suppliers of staple grains like wheat, and a protracted crisis increases the likelihood of scarcity of food and higher prices across the globe. The US will be affected by Russia’s ban on exporting fertilizer. Iowa corn and soybean farmer Ben Riensche predicted that food prices will increase in the US by $1,000 per month due to a 30% to 40% increase in the cost of growing major crops. Nitrogen, phosphorous and potassium prices have also risen. Hungary, concerned about food shortages, has banned exporting all grain.”
The U.S. Data Cupboard on Friday has yet, another trumped up jobs report, this time it was for Feb, and the BLS said that 678,000 jobs were created by them in Feb. Of course, 156,000 of those created jobs were made up out of thin air by the BLS, but even taking 156,000 out of the total still leaves 522,000, and that’s quite unbelievable to me, given that signs on restaurants and other service organizations stating they “help is Wanted”… Gotta keep the neighbors impressed with your clean windows, as my grandmother would say… I’m just saying…
One thing I need to point out from the BLS Bull dookey report, and that is that the Average Hourly Earnings were flat for the month of Feb… And immediately some knucklehead reported that this is a sign that inflation is weakening… Really? And wage growth was the cause of this inflation? Not so fast Tim! This inflation was caused by counterfeiting currency printing, and zero interest rates left at zero far too long… So, go back to that rock you’ve been living in, Tim, and crawl under it and hope that no one else saw your little misquote…
This week’s data cupboard doesn’t have much for us this week until Thursday, so the markets get to catch their collective breaths and get ready for the stupid CPI on Thursday…
For What It’s Worth… Years ago, I used to quote this guy all the time, because I thought he was on top of his game when it came to financials, and now I’ve come back around to Ambrose Evans-Pritchard, who writes for the Telegraph U.K. This article is about how this war is pushing the world into a crisis when it comes to food, and it can be found here: Putin’s energy shock is broadening into a world food crisis, so brace for rationing (telegraph.co.uk)
Or, here’s your snippet: “The world was facing a grain supply crunch even before Putin’s invasion of Ukraine.
The United Nations food price index was already higher in real terms than at the height of the global hunger crisis a decade ago, when Tunisian bread protests set off the Arab Spring.
The tight global market for grains, vegetable oil, and fertilizers was probably one of the many reasons that Putin chose this moment to strike, calculating – wrongly it may prove – that the West would not dare to squeeze him too hard.
The world faces what amounts to a commodity “black swan” across the gamut of primary resources. Oil, gas, coal, and the “ags” are all spiraling higher together, with metals catching up fast. It is a systemic stagflation shock, an intractable problem for central bankers. It acts like a war reparations tax on the economies of importing nations and is ultimately contractionary.
Natasha Kaneva from JP Morgan said inventories of tradable commodities are critically-low and the world is running out of safety buffers. This is a recipe for “nonlinear price increases”, she said.
Unlike the West, China is prepared. It has been stocking up for months and currently holds 84pc of the world’s copper reserve, 70pc of its corn, and 51pc of its wheat.
“China has bought enormous quantities of US soy in recent weeks,” said Rabobank. One might ask if Xi Jinping knew something in advance.
Record food commodity prices are an ordeal by fire for some 45 poorer countries that rely heavily on food imports: the Maghreb, the non-oil Middle East, swaths of Africa, Bangladesh, or Afghanistan. The World Food Programme warned of “catastrophic” scarcity for several hundred million people last November. The picture is worse today.”
Chuck again… We should feel very lucky that we live in a country where farmers & ranchers can feed us… So, the next time you see a farmer or rancher, tell him thanks!
Market Prices 3/7/2022: American Style: A$ .7405, kiwi .6885, C$ .7867, euro 1.0862, sterling 1.3171, Swiss $1.0862, European Style: rand 15.3495, krone 8.9974, SEK 9.9974, forint 364.06, zloty 4.5872, koruna 23.7117, RUB 137.87, yen 115.20, sing 1.3512, HKD 7.8156, INR 76.96, China 6.3200, peso 21.13, BRL 5.0818, BBDXY 1,200.62, Dollar Index 98.99, Oil $123.12, 10-year 1.77%, Silver $25.85, Platinum $1.154.00, Palladium $3.358.00, Copper $4.81, and Gold… $1,991.70
That’s it for today… Well, our Blues took one on the chin in OT on Saturday to the Devils in New Jersey… Well, I’ve learned how to play backgammon and play at least 3 games each day with my condo bldg. friend, JoAnn, who’s from Montreal Canada… She counts her moves in French, and I find that to be charming… She taught me the game, and now proceeds to beat me all the time! But I’ll get the hang of it eventually, and then… hopefully I’ll win more consistently! And I do enjoy playing! My daughter, Rachel, sent me a picture of little Evie last week, haming it up for the camera… I told Rachel that she sure knows how to ham it up in front of the camera! And she’s only 2 ½! Speaking of Rachel, she always tells me that a light blue shirt that I wear, “is my color”, so I always make sure it’s clean to wear when I know she’s coming over! But just last week I had three different condo bldg.. people tell me that the shirt was “my color”… So, now I’m going to buy about 10 shirts of that color! HA! Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Devil With The Blue Dress… I hope you have a Marvelous Monday, and Please Be Good To Yourself! Be Positive, Test Negative!
Chuck Butler