Inflation Continues To Rise…

March 3, 2021

* Currencies & metals rally on Tuesday, but get sold overnight!

* Aussies do something they haven’t done in 60-years! 

Good Day… And a Wonderful Wednesday to you! Well, at the last minute yesterday we decided to go to the baseball game, where the Cardinals were the visiting team, but still at Roger Dean… There weren’t 1,000 people there, and we had some great, hot,  seats out by the Marlins’ bullpen… But a nice breeze was blowing in and we watching another tied game… My good friend, and spring training buddy, Gus, said “well if they tied every game it’ll be easy to remember their record this year”…  I laughed, and my adult beverage almost, oh well, I don’t need to go further…  My former boss, and good friend, Frank Trotter will like this one… Jethro Tull greets me this morning with their song: Locomotive Breath… “And old Charlie stole the handle, and the train it won’t stop going, no it won’t slow down”

Well… the obsessive dollar buying stopped on Tuesday… The Dollar Index, which began the day, yesterday at 91.15, ended the day at 90.78…  And Gold found a way to hold on to its early morning gain and add to it for the first time in what seems to be a month of Sundays! Gold began the day at $1,730.40 and ended the day at $1,739.30, up $13.50 on the day, and Silver gained 23-cents to close at $26.50…   So, all-in-all, it was a good day for the currencies and metals on Tuesday…

It’s nice to see when the price manipulators decide to back off for a while and allow the currencies and metals to run higher isn’t it? I wonder, whenever the price manipulators decide to stick their noses into the markets, just what it is they are trying to achieve? I mean I know that they are under the guidelines of the Gov’t to keep a lid on things that might persuade investors from selling dollars, but besides that, what else are they attempting to achieve?  Because I get so fed up with them that it makes me want to yell at the kids… Well, I don’t have kids at home any longer, so that wouldn’t do me any good… Maybe yell at the walls, because no matter where I am when I’m writing, there are always Wall around to yell at! Unlike kids who seem to come around when their hungry, or want something!  OK… I’m just kidding there… I thought I would do my best impression of the Great Mogambo Guru!

In the overnight markets, Gold has seen the price manipulators return and is down $15.20 in the early trading today… Silver isn’t doing any better and has given back 23-cents this morning. The Dollar Index starts the day at 90.93, up a few shekels from the close of 90.78 yesterday.. 

There was good news to support the recent rise of the Aussie dollar (A$), yesterday…  For the first time in 60-years, The Aussie economic growth was above 3% for two consecutive quarters!  I would say that’s a trend, but my wife says I don’t see very well, so I’ll leave that discussion for someone else… HA!  This report really stunned the economists that follow Australia, but that’s nothing new… Two handed economists… “On one hand we could see this, and on the other hand we could see this”…  Worthless! 

Yesterday, I talked briefly about how Copper was rising in price and reflecting inflation fears… And then I saw this on Twitter, “Framing lumber prices are soaring as are foodstuff prices. This headline: “Soaring lumber prices add $24,000 to new house price since April”. And my favorite headline: “U.S. Homebuilders Urge Biden to Help Ease Sky-High Lumber Costs.”

Inflation is all around us folks, and sooner or later it will be reflected in the CPI (consumer price index) but… the CPI Index, as I’ve explained before was changed under the Clinton administration to allow hedonic adjustments and changes to allow inflation to remain low, and keep interest rates low, to allow everyone to buy a house…  The problem is….  Even house prices are going through the roof right now! It’s everywhere, It’s everywhere, it’s everywhere!  Inflation that is… and you had better get your inflation hedges in place, which in my opinion is Gold & Silver…  I’m just saying…

The Fed has said that they will allow inflation to rise past their 2% target… And I’ve said that once inflation is rising it will be difficult for the Fed to stop it…  Think about that… OK, now that you’ve thought about it, let me see if you’re thinking like me (heaven help you!)   To combat inflation a country increases their interest rates…  if interest rates were increased to a normal level and not even one associated with fighting inflation, which would be 6%, The bond servicing level on our outstanding debt would become a major problem for the U.S. and probably cause it’s financial system to collapse! I’m dead serious about that folks… those kind of interest rates would put the kyboshes on this economy… and financial system. 

Jerome Powell claims that the Federal Reserve is not blowing up bubbles, there is no inflation threat, and that its easy money policy will continue for years…  Yeah, right to all of that! The Fed has blowing the stock markets bubble since Big Al Greenspan, and they will not idly sit by too long as inflation rises…  I’m just saying…

And before I leave this discussion about inflation… This was on… “The world’s biggest central banks will happily live with higher inflation and investors now aggressively betting on a quicker end to monetary stimulus are all but certain to be proved wrong.

After a decade of underestimating inflation, central bankers in the United States, Europe and Japan have every reason keep money taps open and policymakers are even rewriting their own rules so they can let price growth overshoot their targets.

If anything, central banks are more likely to nudge up stimulus, particularly in the euro zone, keeping borrowing costs depressed and ignoring the inflation hawks at least until growth is back to pre-pandemic levels — and not just fleetingly.”   Chuck again.. OMG!

OK… let’s talk about something else, for that discussion was giving me a rash! Ok… I guess I don’t have anything else on my mind this morning, except inflation and how Central Banks around the world, including the Fed will ignore the rising inflation until it’s too late… It’s too late baby, now, it’s too late, thought we really did try to stop inflation…

How about some “news from the weird”…  I read on this morning that Air Jordon sneakers are now an Asset Class…  Wait, What? That can’t be, but this was the headline, “Sneakerheads Have Turned Jordans and Yeezys Into a Bona Fide Asset Class”…   Go figure, pretty soon this so-called asset class will be more valuable than Bitcoin!  HA! 

The U.S. Data Cupboard this morning is still lacking… What gives with this schedule for the data releases? I don’t get it… makes no logical sense to me, but… it is what it is, right?  So, the Data Cupboard today has the ADP Employment Report for February… This report is supposed to be a harbinger for the BLS Jobs Jamboree that will come this Friday… Last month the ADP reported 174,000 jobs created for January, and the BLS reported just 49,000 jobs created…  I’ve always said that the ADP report should be the jobs report that the markets use, because ADP has the paycheck systems for just about every business, and they would know when employees have been let go, or hired before the BLS gets around to calling in their surveys… 

To recap… The currencies and metals both rallied on Tuesday, but are back on the chopping blocks this morning, and overnight.  Chuck points out how inflation is rising everywhere… And how this could be the end-all for the financial system that we’ve all come to love…  Australia did something they hadn’t done in 60-years!  And there’s a new asset class folks… and you’ll never guess what it is, so you’ll have to go back and read that part to find out! HA! 

For What It’s Worth…  Well, I’ve talked a lot about Russia’s plan to de-dollarize through these past couple of years, and how they’ve recruited China to join them… Well, this article was featured on Ed Steer’s letter this morning, and so it qualifies as worthy of being a FWIW article! This is about how Russia could achieve their de-dollarization easily, and it can be found here: Russia could ditch dollar by lifting tax on gold purchases – economist — RT Business News

Or, here’s your snippet: “The Russian government could achieve its goal of de-dollarizing the economy by taking one simple step: dropping the tax it currently charges its citizens for the purchase of physical gold, an economist has said.

Russian citizens would get rid of their dollar savings to buy up gold bullion if the 20-percent value added tax (VAT) were eliminated, according to economics professor Valentin Katasonov, as cited by Russia’s business news agency Prime. He noted that the potential selloff would inevitably drag the greenback down.

However, the economist said that the country’s Ministry of Finance is likely to reject moves to lift the VAT as it would probably cause revenue shortfalls in the federal budget. 

According to Katasonov, Russians could stop hording U.S. dollars if investment in gold was more profitable. This could trigger a domino effect in many other countries that would welcome an opportunity to challenge the exclusive status of the greenback, he added.

But the expert sees this reason as a weak excuse, since the number of investment transactions in gold is so small that the loss would be insignificant in the overall context of the Russian budget.”

Chuck again…  Well, I like Ed Steer, had thought that this tax had been reported as removed a long time ago, but then I guess it apparently wasn’t!  This is scary stuff when you consider that a major country wouldn’t use dollars at all…  That could be a virus that spreads across the world… I’m just saying… 

Market  Prices 3/3/2021: American Style: A$ .7810,  kiwi .7276,  C$ .7918, euro 1.2062, sterling 1.3951, Swiss $1.0900, European Style: rand 14.9134, krone 8.4846, SEK 8.3929,  forint 301.52,  zloty 3.7586,   koruna 21.6706, RUB 74.08, yen 107.01, sing 1.3313, HKD 7.7568, INR 72.88, China 6.4694, peso 20.67, BRL 5.6606,  Dollar Index 90.93,  Oil $60.83,  10-year 1.44%, Silver $26.63, Platinum $1,206.00, Palladium $2,416.00, Copper $4.20, and Gold… $1,724.10

That’s it for today…  And unfortunately, tomorrow and this week too… I received confirmation yesterday that I am to report to the hospital for a blood test early in the morning… So, that pretty much puts the kyboshes on writing tomorrow morning… they sent me a QR code to access the testing area, strange ways we do things these days, eh?  It’s a game day again today!  My beloved Cardinals have 12 hits in two games this spring, and only one of them was a ringing extra base hit! But hey! the other teams have the same problem, as pitching is dominating right now… That will change as spring goes along… Hopefully!  The Blues come on at 9:30 tonight, so once again I’ll only be able to watch one period, before feeling sleepy!  Ok…  Clarence Carter takes us to the finish line today with his 70’s song: Slip Away…  I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself! 

Chuck Butler