Has The Dollar’s Strong Trend Come To An End?

November 9, 2022

* currencies & metals rally on Tuesday

* Gold turns the corner? 

Good Day… And a Wonderful Wednesday to you! Well, I decided that I needed to do something to bring the Blues losing streak to an end yesterday, so I donned by Blues hoodie, and Blues ball cap, over a blue and white shirt, and went to lunch! I received a couple of comments on it, and about the Blues losing streak, and all I could say was, “It’s my team, win, lose or draw”… It’s not like I haven’t gotten used to watching a team I adore lose… My beloved Mizzou Tigers can’t help but shoot themselves in the foot each and every game… It’s not always the Tigers’ fault, sometimes it really bad referee calls, like the one on last Saturday, and who can ever forget the 5 downs they refs gave to Colorado?  Our Blues lost  the game in Philly last night, so I guess it didn’t work, as The Philharmonic Symphony Orchestra greets me today with their version of the song: Sleigh Ride

The dollar got sold again yesterday… The markets, I read, were fearful of a red wave taking over the reins from the Blue crew. Why? Won’t it be the same-o, same-o, only with different guys and gals?  When push comes to shove in the economy, and corporations need bailouts, there won’t be one of the new crew to put their foot down, and say, “no!”, “you made your bed, now lay in it!”   Ok, I digress, but I just didn’t get the part about being fearful of new deficit spenders…

You see how jaded I’ve become about the whole election process? I don’t want to be this way, but it just creeps up on me, and the next thing I know… I’m saying things like I said above…   So, no matter what they said yesterday, the dollar lost ground, yet again, marking 3 consecutive trading days of losses… This time the BBDXY lost 9 index points to end the day at 1,312,  The euro climbed back above parity with the dollar, and the other currencies followed the Big Dog euro, as it left the porch to chase the dollar down the street…  It’s been some time since I’ve used that phrase… I’ve missed saying it!

And yesterday, I told you that the $4 loss that Gold was seeing in the early trading wouldn’t be that difficult to turn around… And turn it around Gold did just that, rallying all day, and ending up closing with a $37.10 gain, to close at $1,713.50… And Silver gained 53-cents to move over $21, AT $21.43…  Now let’s see if Gold & Silver can follow through on those nice gains yesterday… We ended Rocktober with Gold at $1,638…  That’s $75 in gains in 7 days… with most of the gain coming the last 3 trading days.

Has Gold turned the corner? The technical people would say that Gold passed the $1,680 and $1,700 levels that should bode well for it to continue to rise… Well, then who am I to argue with the chartists?

The price of Oil slid by $3 yesterday, and ended the day trading with an $88 handle… And Bonds hardly moved on the day…

So, with the dollar apparently in a free fall, I have to ask the question… “When does the PPT, come in with their treasure chest of funds in the Exchange Stabilization Fund to prop up the dollar once again?”  Just like the cancer wolf… I know he’s always at the door… And as Frank Sinatra sang, You can be riding high in April, and shot down in May… or something like that. (Hey, I can’t remember every lyric of every song I’ve ever heard, although I do try to!)

Or, maybe, just maybe, cause you never know, the PPT will sit on the sidelines this time? OK, I know that’s wishful thinking, but one has to wonder about their mental capacity if they buy dollars to prop it up and then the markets still take it down, ala the yen and the Bank of Japan?

In The overnight markets last night… Well, the currencies are trading in the same clothes as yesterday, as there was little to no movement in the dollar overnight. The BBDXY is up less than 1 index point this morning, and the euro remained above parity to the dollar. Gold is seeing some selling in the early trading today, and starts the day down $7, and Silver joins Gold trading in the red, and is down 19-cents this morning. Again, nothing out there that prevents these two from turning around on the day. 

The price of Oil has dropped another buck, and trades this morning with an $87 handle… The reports/ rumors earlier in the week that China was going to open their economy up, proved to be false, and now the fear that the Zero Covid program will continue longer, has traders questioning the demand for Oil, and so it sees some weakness…  Bonds remained unchanged during the night, so we start today with the 10-year Treasury’s yield at 4.13%… Certainly not as high as I would think it should be, but then when does logically thinking come into play in these manipulated markets?

Well… I had a very important lunch yesterday, with my former Boss, Frank Trotter, who brought me up to date with everything that’s going on in Kansas City, no wait, everything that’s going on with his new venture, Battle Bank…  They’re not ready for prime time yet, still getting their ducks in a row, and waiting on regulators… I think he mentioned next March for the virtual opening of www.Battlebank.com  if you go there, you can put your name and email info on a Waiting list, and when they are ready to launch, you’ll be notified… How’s that for service?  I personally, can’t wait for the opening, so I can move my banking balance from TIAA to BattleBank!   

Frank is gathering some very good people to join him in his new bank, and they will be service oriented, so look for that good personal service that EverBank used to give you!

Ok, now back to our regular programming…  A lot of news headlines last night, talked about how the dollar is getting sold ahead of the inflation data that will print on Thursday, and they all talked about how traders are looking to “risk on trades”, which means Gold…   Remember when every day I report whether it was a “risk-on day” or a “risk-off day”?  Those were the days my friend, I’m so glad that the ended!  But every now and then some writer pulls the phrase out of the closet, and brings it to show how smart he sounds… 

The thought for the stupid CPI is that it will show a weakening below 8% in Rocktober, and if that’s the case, then the markets feel that the Fed Heads have no choice but to pull back the size of their rate hikes…. Remember, these are the Wall Street guys that only care about stocks, and don’t care about inflation… To me they are just crybabies…   But what happens if the stupid CPI doesn’t show that much of a weakening in inflation?  Ahhh,  grasshopper, good question… I guess we’ll have to wait-n-see the color of the stupid CPI tomorrow…

Good friend, Dennis Miller of www.milleronthemoney.com sent me a link to the U.S. Treasury’s final balance sheet for fiscal year 2022, which ended Sept 30th…  Total tax receipts and other income totaled $4,896 Billion, and total outlays were $6,272 Billion, for a total deficit for 2022 of $1,375 Trillion… The thing about the chart that stuck me as weird…The largest outlay for the U.S. is Social Security… But wait, didn’t we all pay into that fund? Yes, we did, and the Gov’t spent it… So, now when all the baby boomers, like me, retire and take their social security payments, it becomes a deficit for the Gov’t to pay out…   If they had only kept their dirty mitts out of the cookie jar, back in the day…

I have to say this now… I’ve been lucky, and so have just about everyone else that reaches retirement age, in that we lived during the greatest growth of wealth every recorded here in the U.S.  The Fed St. Louis, through their FRED division issued this statement: “U.S. national wealth has surged in the past decade, dwarfing the peaks seen in the past: specifically, from $69 trillion to $153 trillion between 2012 and 2021, a 220% rate of increase. National wealth has continued to rapidly increase even after controlling for inflation and economic growth.”

I would have to say that most of that growth in wealth has come from the decade long stock market bubble.. I wonder how that’s going to look in a couple of months from now?  And that brings me to say something that I told a group of bankers and lenders in Atlanta years ago… I said, “if the U.S. had remained on the Gold Standard, our quality of life would not see the excesses that we see today, because there wouldn’t be easy credit, or currency printing, instead there would be deficit adherence… So, we could do without some gee gaws, or tchotchkes,  100 inch tv screens, and what have you, but we wouldn’t have $31 Trillion in current Debt and $172 Trillion in Unfunded Liabilities hanging over our heads like the Sword of Damocles”…  We should have known better, that given free rein to print currency, that it would lead to what it has… But our leaders didn’t know better, or they thought that it was OK… as long as inflation didn’t rise up…Uh-Oh…

Last week, the Eurozone printed consumer inflation at 10.7% for the previous month… As far as I can tell, there are no substitution games, and weighting games played with their consumer inflation calculations… So, the ECB is so far behind the inflation 8 ball right now that it can hardly see the rest of the table… So, expect more 75 Basis Points rate hikes from the ECB, as they attempt to play catch-up… And this thought that more rate hikes are to come, even though the Eurozone is in negative real interest rates territory, is helping the euro climb out of its below parity hole…  These are the same thought regarding rate hikes coming that helped fuel the dollar’s surge this summer and fall, until now that is…

The U.S. Data Cupboard is still lacking today, so let’s move along, for these are not the droids we’re looking for…

To recap… The dollar got sold big time yesterday in the U.S. session, as the BBDXY lost 9 Index Points on the day, and the euro climbed over parity with the dollar. Gold has seen new life recently with a move being made because of inflation fears… Gold gained $37 yesterday, and Silver gained $53-cents, both moved beyond what was considered major levels or resistance… Chuck gives an update on the new BattleBank.com and says he can’t wait for it to open its virtual doors…

For What It’s Worth…  I found this on Ed Steer’s letter this morning, and you know that I’ve told you several times that if Ed thinks the article is worthy, then it’s a no-brainer for me!  This is an article about a Big Hedge Fund calling for armegeddon and it can be found here: Hedge-fund giant Elliott warns looming hyperinflation could lead to ‘global societal collapse’ (msn.com)

Or, here’s your snippet: “That’s executives at leading hedge-fund firm Elliott Management Corp. warning that the world is heading toward the worst financial crisis since World War II.

In a letter sent to investors, and reportedly seen by the Financial Times, the Florida-headquartered firm told clients that it believes the global economy is in an “extremely challenging” situation that could lead to hyperinflation.

Elliott did not respond to MarketWatch’s request for comment.

The firm, led by billionaire Paul Singer and Jonathan Pollock, told its clients that “investors should not assume they have ‘seen everything’ ” because they have been through the peaks and troughs of the 1987 crash, the dot-com boom and bust, the 2008 global financial crisis, and previous bear and bull markets.

It added that the “extraordinary” period of cheap money is coming to an end and has “made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period.”

The letter reportedly said the world is “on the path to hyperinflation,” which could lead to “global societal collapse and civil or international strife.”

Elliott reportedly argued that markets have not fallen enough yet and that an equity-markets decline of more than 50% would be “normal,” adding that it couldn’t predict when that would happen. The S&P 500 has dropped 19% from its peak at the beginning of the year.

Elliott executives warned clients that the idea that “ ‘we will not panic because we have seen this before’ does not comport with the current facts.”

They blamed central-bank policy makers for the current global economic situation, saying they had been “dishonest” about the reasons for high inflation. They said lawmakers had shirked responsibility by blaming it on supply-chain disruption caused by the pandemic instead of citing the loose monetary policy imposed two years ago during the COVID-19 peak.”

Chuck again…  WOW, a stock jockey that called out the Fed’s loose money printing… Now that’s something to write home about, eh?  The “investors should not assume they have seen everything” statement is quite true in my opinion… for whatever that’s worth.Market Prices 11/8/2022: American Style: A$ .6468, kiwi .5904, C$ .7440, euro 1.0046, sterling 1.1483, Swiss $1.0176, European Style: rand 17.7940, krone 10.2776, SEK 10.7963, forint 401.56, zloty 4.6807, koruna 24.2285, RUB 61.20, yen 145.79, sing 1.39997, HKD 7.8595, INR 81.43, China 7.2537, peso 19.55, BRL 5.1701, BBDXY 1,312.49, Dollar Index 109.70, Oil $87.46, 10-year 4.13%, Silver $21.24, Platinum $995.00, Palladium $1,732.00, Copper $3.64, and Gold… $1,706.25

That’s it for today… Now that the voting has taken place, now all the playing of musical chairs begins, with claims of wrong doing, etc. Same stuff we went through in 2004, remember hanging chads?  UGH!  I received my new Harry Bosch, Renee Ballard Book yesterday, and will begin reading it today… I thoroughly enjoyed my time with good friend, Frank Trotter yesterday… He showed me a video of the “mule path” hike he went on last week, simply beautiful around Sedona, Ariz… We talked and talked, until everyone in the restaurant had left to go back to work, or whatever… A dear reader sent me a note and asked me if I was rushing Christmas with me listening to Pandora’s Smooth Jazz Christmas… I responded, maybe I am, but I love this music style so much, and I only listen to it at this time of year…   Sam Whitmire plays his piano on his version of the song: Silver Bells, to take us to the finish line today… I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself!

Chuck Butler