Has The Bank of Japan Finally Ready To Hike Rates?

  • Currencies & metals rally in the overnight markets
  • So, you’re telling me that there were states that didn’t grow in the 3rd QTR?

Good Day… And a Tub Thumpin’ Thursday to one and all! Well, Kathy & Chuck went to dinner last night with good friends, Diane and Gary.. We talked about many different things and by the time we left, the restaurant was dimming the lights! We went to an Italian restaurant, that I thought when hearing of our destination, that “eating soft pasta would be great for my mouth”… And so it was!  Yummy, if you’re keeping score at home!  The great pianist, Beggie Adams greets me this morning with her version of hte song: Frosty The Snowman… 

Well, the frost that formed over Gold on Tuesday this week, looks as though it has finally gone into melting stage… Silver still has some frost hanging around, but I sense that the short paper traders have taken their pound of flesh from Silver, and it’s now time for Silver to gather up the broken pieces and put them back together again…  Yesterday, Gold gained $6.30, to close at $2,026.10, and Silver lost 27-cents to fall below the $24 handle, at $23.97… I think the short paper traders got what they were looking for on Tuesday, and I’m happy for them, (NOT!) and hope they now decide to take their ball and bat and go home… 

The dollar is still being supported from the PPT’s intervention on Tuesday, and the dollar gained 2 index points yesterday to end the day at 1,244….  So, all the difficult work that the currencies had put in VS the dollar was wiped out by the intervention… I get it, the powers that be, can’t have the dollar getting sold like funnel cakes at a State Fair, but… Do they have to do it so violently?  I’m just asking… 

The price of Oil continues to drop, and yesterday it lost $2 to end the day trading with a $69 handle… And the bond frenzy continues, with the 10-year’s yield falling to 4.12% yesterday… This is reaching an overbought area, in my opinion… And just like everything in life, something swings way our of control on one side, and int he correction, it swings way out of control on the other side… Never stopping in the middle …  

In the overnight markets last night… The dollar buying stopped… What’s up? I thought… The BBDXY is down 3 index points this morning… Apparently the ADP Employment Report spooked the dollar bugs, a only 103,000 jobs were added in November. Gold is up $9 to start the day today, still picking up the pieces of its broken price from Tuesday, and Silver is flat to up 2-cents to start the day today… The selling of Oil appears to have stopped as witnessed by the uptick in the price to a $70 handle this morning…  And the bond frenzy is taking a pause for the cause and starts the day with a 4.17% yield… 

While writing down the currency prices today, I came across the Japanese yen, and noticed that it had booked a nice profit in the last 24 hours, and immediately went looking for a reason the yen with all its problems was on the rally tracks… Well, remember a week or so ago, when I told you about what the Bank Of Japan (BOJ) Gov, had said about “when we return rates to normal”, and how he didn’t say “if we return rates to normal”, and suggested that, while it’s still somewhat unimaginable, that the BOJ might be hiking rates to get out of the negative rates policy… Well… here’s the skinny from Bloomberg.com : ” Traders are rapidly increasing bets that the Bank of Japan will scrap the world’s last negative interest-rate regime as soon as this month after the central bank’s leaders indicated they could be preparing a shift in policy.

The selloff, initially fueled by comments from BOJ Governor Kazuo Ueda and one of his deputies, jolted financial markets in Tokyo and beyond, shattering a period of relative calm for Japan’s bonds.”

For those of you who missed class that day, or were fiddling with your smart phone,  I told you how this change in their interest rate policy could open a brand-new can of worms for the dollar… You see for decades now, all the Big Box buyers of bonds, have ignored and steered clear of the Japanese bonds… But if Japan would see their bond yields rise, it could signal buying from the Big Box buyers, and that could take away from dollar investments… See how I looped back and brought this all together for your reading enjoyment? HA!  

But seriously, this COULD be a real chink in the dollar’s armor… UH-OH… 

Well, in my reading and research yesterday, I came up with an article on the freemarketsinside.com site… In the article they talked about how China is reaching out to Africa to further their desire to spread their de-dollarization  call”… And China is using every trick in the book to achieve their goal… For instance, last year, China’s only bank in Africa made HUGE loans to Africa, using that as good neighbors, and gaining the trust of the people in Africa, so that when they want them to ditch their use of dollars and use their renminbi instead, they are coming from a position of trust of the people… 

And in one of my fave countries… Australia… it seems that their consumers are running out of their savings, and still wanting to spend… Why would Australians be any different from U.S. consumers?  This doesn’t lend itself to bring you to want to own A$’s, going forward…  I’m just saying… I know, I said something in a previous Pfennig that there were some observers that thought the A$ was on its way to 70-cents… But, all that is predicated on the U.S. dollar’s performance, which right now isn’t doing the A$ any favors… 

On Bloomberg.com, I found that, no wait, I’ll let Bloomberg tell  you: Six US States Saw Their Economies Shrink in the Second Quarter

Economic output shrank in six US states in the second quarter of 2023, with the biggest contraction coming in the state with the smallest economy — Vermont — according to data published Tuesday by the Bureau of Economic Analysis.

Most of the states with shrinking economies are along a north-south belt stretching from Wisconsin to Mississippi.

Chuck again… of course the big box states like Texas grew at 5% pace, which skewers the national numbers… Of course, we didn’t hear about this when the GDP number was announced last week… No, it was all about how great the U.S. economy was…  But you and I know differently, don’t we? We’ve observed that the ISM manufacturing contracted further, Durable Goods Orders, and Factory Orders were both negative, and tomorrow we’ll probably see the U.S. labor market suffer a slowdown… I say “probably” but no one ever knows just what the BLS has up their sleeves… Yesterday, we saw that the ADP Employment Report showed that only 103,000 jobs were added in November, and furthermore, the 3rd QTR Productivity, showed a gain to 5.2%…  As if that’s something to get you excited about, as all it shows you is that the folks that are working, are working longer and harder… 

But not to worry, because all those Job Openings are falling like flies, so there’s help on the way… Well, that is as long as you believe the BLS’s numbers here…. I don’t, that’s for certain! 

There’s something to all this Gold buying since the big selloff on Tuesday this week… Could it be the short paper traders, after driving the price down, are now buying Gold for the next buildup? Remember how I explained this Ponzi scheme to you previously?  Well, it could certainly be just that… 

The U.S. Data Cupboard today, doesn’t have much for us, as the markets prepare for tomorrow’s Jobs Jamboree, and right now the so-called expert forecasters say that contrary to what the ADP report showed, that the U.S. had created 190,000 jobs in November…  And this is where I say hogwash! ADP is the check system that all companies use for their payrolls… So, if they had 103,000 new entries in November, that is the jobs created, period!  

To recap…  The dollar buying continued yesterday, but Gold & Silver found ways to gain on the day. The dollar buying ended last night, as traders all attempt to pick of the pieces of the broken prices of currencies, metals, bonds and everything else… Japan might be prepping the markets for an end of their negative interest rate policy… Not all states were growing last quarter, as the GDP report would have indicated… And Chuck goes through the reports that have been negative to argue with the propeller heads that calculated GPD… 

For What It’s Worth…  I talked about bank branches closing the other day, and so I thought I would back that up with more info on branch closings, and that is what this article is about, and can be found here:We Are Witnessing an Avalanche of Branch Closings as U.S. Banks Desperately Try To Stay Alive – LewRockwell

Or, here’s your snippet: “If you do things the right way, in the long run you will get positive results.  But if you do things the wrong way, in the long run you will get negative results.  Our banks are the beating heart of our entire economy, and unfortunately, they have been doing things the wrong way for a long time.  As a result, the entire system is being greatly shaken.  Loans are starting to go delinquent at a frightening pace, we have seen endless “banking glitches” in recent months, tens of thousands of banking employees have already been laid off, and U.S. banks are sitting on hundreds of billions of dollars of unrealized losses.  Sadly, a lot more chaos is on the way.  As small and mid-size banks fail, they will get gobbled up by the big boys.  Of course, the big boys are scrambling to survive too.  In fact, it is being reported that JPMorgan Chase will close a total of 159 local branches by the end of this calendar year…

In 2023, JP Morgan Chase has or will close 159 branch locations across the United States. The banking giant is not alone in its decision to scale back its physical presence as banking moves online; Bank of America, Wells Fargo, and Citi Bank have announced closures at similar scales that will continue into 2024.

Bank of America is not far behind.

We are being told that it will permanently close more than 100 local branches by the end of 2023…

Bank of America is the second largest bank in the United States, and this year, the financial giant has announced that it will close up to 138 locations. To date, 95 branches have been closed this year, and 15 more are to shutter by the end of the year. The remaining locations are planned to close in 2024, meaning that the trend, common among nearly all of the big banks of shutting local branches will continue.

At this point, just about everyone is closing branches.

In addition to laying off workers, this is one of the measures that banks can take to try to save some money.

As I discussed the other day, in just one week in November U.S. banks submitted filings to permanently close another 64 branches.

Of course this “avalanche” of branch closings didn’t just start recently.  In 2022, our banks shut down more than 3,000 branches.  We have never seen anything like this before, and everyone agrees that more branch closures are coming in 2024.

But many banks have no choice.  Right now, U.S. banks are sitting on an absolutely colossal mountain of unrealized losses.”

Chuck again…  like I said, banks don’t need branches when they have digital currencies… 

Market Prices 12/7/2023: American Style: A$ .6562, kiwi .6133, C$ .7348, euro 1.0777, sterling 1.2581, Swiss $1.1406, European Style: rand 18.7636, krone 10.9081, SEK 10.4478, forint 353.89, zloty 4.0188, koruna 22.6050, RUB 92.91, yen 145.11, sing 1.3408, HKD 7.8097, INR 83.32, China 7.1551, peso 17.33, BRL 4.8858, BBDXY 1,241.38, Dollar Index 103.89, Oil $70.18, 10-year 4.17%, Silver $23.99, Platinum $908.00, Palladium $996.00, Copper $3.74, and Gold… $2,035.00

That’s it for today and this week… I apologize for the tardiness of the letter this morning… I just couldn’t answer the bell this morning… And that’s not like me… I’ve always answered the bell no matter what trial and tribulation I had gone through during the night… I guess there’s a first time for anything!  I have a jam-packed week, next week, and I’m looking forward to it! I’m confused with our Blues… They win on Las Vegas ice, but lose on home ice…  A very strange team so far this season… The St. Louis U Billikens lost their game VS Drake last night too… I’m glad I was busy away from home, so I didn’t have to watch these losses!  On Saturday this week, my beloved Mizzou Tigers will play their old rival, Kansas… in the words of Gus Kyle, that should be a real barnburner!  I anxiously await the start of that game on Saturday… David Ian Trio takes us to the finish line today with their version of the song: I’ll Be Home For Christmas… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow! And don’t forget to Be Good To Yourself!

Chuck Butler