Gone Too Far? I Don’t Think So!

September 28, 2022

* the wrecking ball dollar pauses on Tuesday

*But the dollar is right back to destroying currencies overnight

Good Day… And a Wonderful Wednesday to you! Well, my beloved Cardinals put to bed the pennant chase for the Central Division last night with their win VS the Brewers, The Brewers had to suffer the humility of watching the Cardinals celebrate on the Brewers’ field… The celebration continued into the clubhouse, where champagne and other products were poured, sprayed at, and consumed! I love watching those clubhouse celebrations through the years…. And now the Cardinals have to come back and play 7 more games before the playoffs begin… This should be good… Hurricane Ian is battering Florida on the Gulf side and into the state, I hope everyone is safe… The Allman Brothers greet me this morning with their song: Southbound… “Well, I’m southbound, baby, I’m coming home to you” …

Well, the dollar took a break from its wrecking ball moves, and paused for the cause yesterday. The BBDXY gained less than 1 index point on the day, and Gold was actually allowed to gain on the day! The currencies remain under great weight and pressure from dollar traders bidding up dollars, but at least there was a day when the wrecking ball dollar didn’t do any wrecking!

I know I don’t usually start the letter with talk about data prints, but I can’t hold back my frustration with the stupid Consumer Confidence report that printed yesterday for August… Apparently, someone, somewhere still believes that the Fed Heads can bring about a “soft landing”, because they Confidence Index went from 103.9 in July to 108 in August! What, What? Yeah, those numbers are correct.. I couldn’t believe my eye when I saw it either! The Dow entered Bear market territory on Monday, and while that doesn’t count for the August report, stocks were getting sold during August, and I just don’t see how anyone in their right mind, could feel confident about the U.S. economy, stock market, Fed, Treasury, Gov’t, and anything else right now… Well, I take that back, for I feel confident right now, that… These people are all going to feel the pain and cry the tears… I’m just saying!

As I said above, Gold gained on the day yesterday $4… But here’s the kicker on that… Gold was up more than $18 during the day, before the price manipulators showed up at the Comex with arms full of short Gold paper trades… When I saw Gold begin to get marked down, I threw up my hands, and said, “not again! “ But it was what it was, and that’s that! Silver finished the day flat, at $18.47… Gold closed the day at $1,630.20… A far cry from the high of the day which was $1,642.60…

The price of Oil slipped a buck yesterday to end the day trading with a $77 handle, and Bonds… Whew! The selling in bonds led to the 10-year’s yield rising to 3.98%!! the 3-year is 4.48%, so the yield curve remains inverted… I would say that if you feel the need to buy bonds, I would say keep it short, no more than 3 years… But then that’s just me, looking at the Fed/ Cabal/Cartel, and their rate hikes that are still to come.

In the overnight markets last night…. The wrecking ball dollar got back to kicking tail and taking names later last night. The BBDXY gained over 5 index points, and the euro and sterling seem to have taken the brunt of the wrecking ball’s destruction of currencies. Gold is down in the early trading today $3, and Silver has given back 30-cents in the early trading. 

The price of Oil continues to trade between $77 and $78, with the $78 handle being the choice of traders this morning.  And I already talked about Treasuries, so no need to go over that again… 

Ok, so it appears that the wrecking ball dollar is back to its recent tricks… The rest of the Globe is not happy with the wrecking ball dollar… You see, the problem here is that these countries all around the world, borrowed money with a cheaper dollar, and now have to pay the loan back with more expensive dollars, how is that going to work out for them? Not good is the answer…

I read this morning that renminbi traders are looking at the renminbi and thinking that that Peoples Bank of China (PBOC) has lost control of the currency… I would warn them about underestimating the PBOC, but then they should know that already! I’m just saying… 

I couldn’t believe what I was reading the other day, when I read a piece by Jeremy Siegel , who believes the Fed has gone “too far”… Really, he said that! Listen in, “”The Fed’s tightening and their talk of super-tightening has just pushed markets way too extreme,” the top economist said in an interview with CNBC on Monday. “[It’s] so extreme I think the risk of recession is so much higher than waffling on inflation.”

So, apparently, Mr. Siegel is a fan of runaway inflation! But as I told you the other day, Bill Bonner keeps screaming from the rooftops that it’s a case of: Inflate or Die… Either way we’re toast, no make that burnt toast!

The British pound sterling continues to get hammered folks… This is scary if you ask me, for now the question is whether or not the pound will drop below $1… The pound is being compared to with the Mexican peso… YIKES! Well, the U.K. make a big mistake thinking that what’s good for the Goose (USA) is good for the gander (U.K.) as they are going to be deficit spending to stimulate their economy, and they did so thinking that none of the U.S.’s deficit spending weakened the dollar, why would it weaken the pound? Bad Mistake… And now you made your bed, and you get to lay in it!

Remember me telling on a few occasions about how the Singapore dollar (S$) and the Chinese renminbi, were tied at the hip with an invisible rope? It was all about competition for exports, and having the Monetary Authority of Singapore, thinking that they had to match the moves in the renminbi so that one currency or the other didn’t have an advantage, remember? Ok… Well, that’s why with the small island nation, Singapore isolated from most of the rot in the world, seeing their currency lose so much ground recently, keeping in touch with the renminbi that has really taken a hit on the zero Covid program and the near shutting down of their economy, shipping, etc.

The Russian ruble continues to be strong VS the dollar, and any other currency for that matter. And Oil isn’t near $100 as it once was! The ruble is a Petrol Currency, and therefore it move alongside the pricing of Oil, but recently, with the ruble being tied to Russian Gas, and Gold… it has held its value VS the dollar, and will continue to do so, in my humble opinion…

So, do you all recall a week or so ago, when I put the link to an interview with Frank Trotter in the For What It’s Worth section? His new bank, when it come online, sounds like an EverBank 2.0.. And I’m so excited about this… I will definitely move my bank account to BattleBank when it opens…As I told my former colleague, Aaron Stevenson, the other day, “TIAA didn’t want me, and now the feeling will be mutual”… I do believe the years of me not talking bad about TIAA are over.. So, the timing of Frank’s new bank couldn’t have been more timely!

The U.S. Data Cupboard yesterday, had the August prints of Durable and Capital Goods orders… Durable Goods were negative -.3%, following up July’s negative -.1%, while Capital Goods orders were positive 1.7%.. .I don’t get how that happens, as Corporations are laying off employees, not expanding, but then it is a Gov’t print, so believe it at your own risk… The Home Price Index dropped 6.9% in July… That’s HUGE folks… and just the beginning of the rot on housing’s vine… And we already talked about the stupid Consumer Confidence bogus number…

To recap… The dollar took a pause yesterday, and decided not to wreck any more currencies and metals, for the day. The BBDXY gained less than 1 index point yesterday, and Gold gained $4 after it was up much higher earlier in the day yesterday. Jeremy Siegel wants to see runaway inflation in our country… and the poor pound sterling is heading for sub $1? In the overnight markets last night, the wrecking ball dollar got back in the driver’s seat (Sniff-n-the tears), and has gained more than 5 index points overnight.

For What It’s Worth… Well, I’m really not into stocks per se, but since everyone else made the stock market out to be our economy in recent years, I think that when it starts to implode, that I should point out that the “economy” is faltering, and so it is that I have an article by Bill Bonner this morning that talks about all that, and it can be found here: Lower Lows – Bonner Private Research (substack.com)

Or, here’s your snippet: “Dow slips below 30,000 as markets wobble and outlooks turn sour

As predicted last week, stocks began trading yesterday with the Dow below 30,000. Next target: 20,000.

One headline at Bloomberg tells us that both “Goldman and Blackrock sour on stocks.”

Another tells us there are “98% Recession Odds.”

Meanwhile, the Dow “officially” fell into a bear market yesterday… and is headed lower.

Do we know that the Dow will trade below 20,000? No, of course not.

But what we think we know is that the Fed will surprise investors twice. First, on the way down. Second, on the way up.

Many investors are already surprised by the Powell Fed’s steadfast pursuit of lower inflation levels. CNBC caught up with Wharton professor, Jeremy Siegel, who thinks the Fed as “gone too far:”

“The Fed’s tightening and their talk of super-tightening has just pushed markets way too extreme,” the top economist said in an interview with CNBC on Monday. “[It’s] so extreme I think the risk of recession is so much higher than waffling on inflation.”

The central bank has shown no sign of easing its rate hike campaign since inflation reached 9.1% this summer, with Fed Chair Powell vowing to keep hiking rates until the “job is done”.

“Gone too far,” was what analysts said after the Fed’s rate hike in July. “Gone too far,” was repeated after last week’s 0.75% Fed funds increase. And ‘gone too far’ will be the refrain for the next one too.”

Chuck again…  “gone too far, my ask me no more questions, I’ll tell you no more lies”! I’ve told you before that I love to read Bill Bonner’s letter, he does a great job of explaining deep thoughts so that everyone understands them, and then he attacks the common thoughts that prevail in our lives… Thank you Bill…

Market Price 9/28/2022: American Style: A$ .6400, kiwi .5613, C$ .7259, euro .9556, sterling 1.0555, Swiss 1.0116, European Style: rand 18.0922, krone 10.9464, SEK 11.4044, forint 430.54, zloty 4.3054, koruna 25.8190, RUB 58.83, yen 144.76, sing 1.4470, HKD 7.8498, INR 81.94, China 7.2357, peso 20.45, BRL 5.3800, BBDXY 1,358.93, Dollar Index 114.67, Oil $78.60, 10-year 3.95%, Silver $18.17, Platinum $842.00, Palladium $2,076.00, Copper $3.38, and Gold… $1,626.98

That’s it for today… Well, silly me, I got online 10 days ago, when the Cardinals playoff tickets went on sale, and bought tickets to two games… I wasn’t thinking that the games would take place while I’m out for two weeks coming up.. Now, I’ll have to see if someone wants to buy them, UGH!… Yes, I’m heading south next week for two weeks, but this time I’ll take my laptop and write from the road. I was home alone last night, and no burglars tried to break in! HA! I remember the days when my beloved Mizzou Tigers would rise up and upset a highly ranked team… but those were the days my friend, we thought they’d never end… (Mary Hopkin) I bring this up because the Tigers play Georgia who’s #1 this coming Saturday… No, I don’t have any dreams of a Tiger upset… UGH! Marvin Gaye & Tammy Terrel, take us to the finish line today with their song: Ain’t Nothing Like The Real Thing Baby… I hope you have a Wonderful Wednesday to today, and please Be Good To Yourself!

Chuck Butler