February 1, 2023
* currencies and metals turn around on Tuesday!
* Memo to traders: There’s a shortage of Copper….
Good Day… And a Wonderful Wednesday to you! And.. Welcome to February! Except for last year, when the baseball owners and players were having tantrums like spoiled brats, February marks the month when pitchers and catcher report… So, this is always the beginning of spring for me… The day pitchers and catchers report for spring training, which this year will be Feb. 13th… So, less than a fortnight away!! YAHOO! I’m currently having to deal with a problem between MLB and Stub Hub, where the barcodes won’t load on Stub Hub, which makes it impossible to deliver tickets that have been sold… of which I have at least 3 games that have sold, and I can’t deliver the tickets! UGH! First game at Roger Dean this spring will be Feb 25, so… MLB and Stub Hub have 24 days to get it corrected! The late great, Leon Russell, greets me this morning with his song: Masquerade…
Well, yesterday turned out to be “Turn Around Tuesday”! All the rot in the currencies and metals got turned around in the U.S. session yesterday, as traders and investors saw the dip in the two asset classes and went hog wild buying the dips! Gold which was down $20 in the early trading on Tuesday, came back to post a gain of $ 5.20, and Silver, which was down 48-cents, turned it around to 13 -cents gain… Good show!
The BBDXY, which was up 3 index points, turned around and lost 2 index points on the day! The Price of Oil, which was barely hanging onto the $77 handle, gained $2, on the day and ended the day trading with a $79 handle! Bonds were bought… and the yield on the 10-year slipped to 3.50%…
All-in-all, it was a good day for the non dollar investors… Like many of you! You know, this got me thinking about the origins of the Pfennig now in its 31st year of being written… That took me back to days when I had to wear a suit and tie to work each day… YUCK! And life seemed simpler then… We, as a country weren’t at war with anyone, seniors could get 6% in CD’s and live off the interest, stocks were exuberant per Alan Greenspan, and our debt was $5 Trillion, and even I wasn’t worried about our ability to pay it back then… I could wax nostalgia even more, but I’ll stop there… Think about that though… In 1992, our debt was $5 Trillion… And update on that will be in the FWIW section today, so you won’t want to miss that!
In The overnight markets last night…. The general feeling among traders were to sell dollars but not to the extent that they were over exposed, given the FOMC announcement is due this afternoon… Like I’ve said previously, I believe the FOMC will hike rates 25 Basis Points this afternoon, and keep talking about hike rates more… But the end is near, and the markets are feeling that… So no reason to go hog wild buying dollars any longer… The BBDXY is down 2 index points this morning, Gold is flat as a pancake (Head East), and Silver is up 4-cents to start the day today…
Bonds continue to get bought, as the bond boys think they have it all figured out with regards to FOMC rate hikes going forward. The Price of Oil is just a tad below the $79 handle at $78.94…
Well, the FOMC members will have to put away the board games, and decks of cards, they’ve been playing with the last day, to bide their time, as they await the 1 o’clock deadline for their rate announcement this afternoon… You know, it’s gotten out of hand, all this attention given to the members of FOMC… Federal Open Market Committee… If I were King… I would dissolve the Fed/ Cabal/ Cartel, an allow the interest rates to be set by the bond markets… And money supply would be held in check by the parameters that I set for spending in Congress… Now there, doesn’t that sound more workable? Now, we just need to overthrow the gov’t and install me as king… HAHAHAHAHA!
What’s going on with Copper these days, just last week Copper price hit $4.27, and yesterday, Copper closed at $4.12, why the swings? Now, I’ve been talking about a Copper shortage that’s coming for some time now, and recently I read where experts say we could be looking at a 10-million-tonne deficit in at little as two years, in fact the shortfall could come even sooner, thanks to a number of supply-side events that have taken place recently. So, why isn’t the price of Copper soaring, based on markets looking forward at a shortage? Can you say, price manipulators? I knew you could…
But eventually, the shortages will begin to show in Copper, and the price manipulators won’t be able to hold down the price any longer… I’m just saying…
Ok, so I received no offers from my request that I walk away for good, if the payment was appropriate, so that the currencies and metals could rally without me being here to jinx them… I really didn’t think I would receive any, just thought I would offer! HA!
My friend, and the editor of the 5 Minute Forecast, David Gonigam, recently asked his readers to write in if they thought their local grid was under pressure… He received tons of responses from people all over the country that were concerned with their local electrical grids… They had either had black outs, or rolling black outs, and had to do without power for hours at times… And the thought while I was reading these entries, is… And this is before there is no more coal, gas, nuclear generators, and the country is all driving electril cars… Think about that for a minute… Do you think the mental giants that decided to get rid of the energy sources that made us a great nation, thought about the power grids, an the stress that will be put on thiem, when solar power isn’t constant? Nah… those are thoughts that never occurred to them one iota! Again, I’m just saying…
And switching to a fun thought… 50 years ago, SchoolHouse Rock premiered… You know, Conjuntion Junction what’s your Function? Bloomberg is on the story: “Schoolhouse Rock” began with math but branched out to other topics, such as civics, grammar and science. One of the most famous episodes, “I’m Just a Bill,” was written by jazz songwriter Dave Frishberg and sung by jazz trumpeter and vocalist Jack Sheldon. It starts with a congressional bill in human form sitting dejectedly on the Capitol steps, lamenting:
I’m just a bill.
Yes, I’m only a bill.
And I’m sitting here on Capitol Hill.
Eventually, he learns that the House and Senate have passed him and the president has signed him into law.”
Chuck again… my youngest brother, Mike, was subjected to the Schoolhouse Rock, and I remember walking through the house, and hearing him sing along with the songs…
Yesterday’s Data Cupboard, had the Employment Cost Index for the 4th QTR, and it showed a slip from 1.2% to 1.1%, so the cost to employers has weakened… Bill Bonner talks about this all time as to how real wages haven’t gained in decades, but inflation is now eating the wages that remain, away…
In addition, the Case/ Shiller Home Price Index was a “no-show”, as it failed to be ready for prime time! (probably had to go over the massaging), and the stupid CPI gained last month… Stupid, Stupid, Stupid…
Today’s Data Cupboard is dominated by the FOMC rate announcement this afternoon, but that’s not all that is on the docket today… The ADP Employment report for last month is due to print, and is expected to show employment dropped in January. In addition, we’ll also see the ISM report (manufacturing index), and it is also expected to weaken, as it remains below the 50 level, that decides whether an economy is contracting (below 50) or expanding (above 50)… It’s currently at 48.8%, and is expect to come in at 48.0%…
To recap… Yesterday was Turn Around Tuesday, as the currencies and metals wiped out overnight losses, to post gains on the day. Chuck thinks that the Bond Boys think they have it all figured out, what the FOMC is going to do going forward, and bonds are getting bought up like funnel cakes a State Fair! Chuck talks about Copper, and what’s going on there… And it’s the 50 year celebration of Schoolhouse Rock!
For What It’s Worth… I mentioned Addison Wiggin the best selling author, and producer of I.O.U.S.A, on Monday, and then yesterday he sent me an essay by Adam Baratta that talks about the debt in the U.S. This essay is long, but I cut out a few paragraphs from the essay for you here today, but should you want to read his entire essay, you can find it here: Wiggin Sessions Archive – 5 Min Forecast
Or, here’s your snippet: “When the U.S Government debt topped $1 trillion dollars for the first time in late 1981, New York real estate magnate Seymour Durst sent a card to every member of Congress that said: “Happy New Year! Your share of the federal debt is $5000.”
Durst, the father of notorious killer Robert Durst, outed in the HBO series The Jinx, took it a step further eight years later when he added a digital debt clock to the side of one of his buildings viewable from Times Square and for all to see. His goal was to publicly embarrass Congress into action. At the time in 1989, our national debt stood at $2.7 trillion.
Our national debt has risen more than 31 times since 1981 and currently stands at over $31.4 trillion. To put this number into perspective – assuming no breaks, no sleep, and no snacks, it would take a person 980,000 years to count to 31 trillion.
What was initially intended to be “embarrassing” is now “ominous” for those who look for signs. Durst’s debt clock remained under the $10 trillion mark for about 20 years. It then stayed under the $20 trillion mark for 8 years. It then held under the $30 trillion dollar mark for about five years. How long will it take before we get to $40 trillion?
While the numbers seem alarming, debt on its own is a meaningless number. To find relevance and more deeply understand inflation and banana republics, we must compare debt to productivity. Only then can we really know if escalating debt is an issue to concern ourselves with.
When Durst initially sent postcards to Congress 42 years ago, our nations GDP was $2.7 trillion and we had a debt-to-GDP ratio of 35%. Our GDP has increased 10 times since then. Sadly, our debts have increased 3X’s as fast. Our debt to GDP ratio is now 121%.
This is a problem.
Now, instead of racing higher at $10,000 per second as our debt clock did in 1992, our national debt soars higher at a pace of nearly $50,000 per second. If Durst were writing postcards and looking to bother Congress today he would say, “Happy New Year, your share of the federal debt is $94,209.”
Is anyone bothered by this?
Certainly not Congress.”
Chuck again… Yes, I know, I’ve been telling you all these same things for years, but sometimes it just sounds different, and you hear it better, when it comes from someone else…
Market Prices 2/1/2023: American Style: A$ 7078, kiwi .6441, C$ .7513, euro 1.0895, sterling 1.2325, Swiss $1.0921, European Style: rand 17.2381, krone 9.9406, SEK 10.4183, forint 357.87, zloty 4.3202, koruna 21.8261, RUB 70.09, yen 129.83, sing 1.3126, HKD 7.8429, INR 81.93, China 6.7403, peso 18.80, BRL 5.0758, BBDXY 1,221.49, Dollar Index 101.89, Oil $78.95, 10-year 3.48%, Silver $23.56, Platinum $1.011.00, Palladium $1,671.00, Copper $4.13, and Gold… $1,929.58
That’s it for today… Bad night for my SLU Billikens, as they lost on the road at Fordham. Not a good game for the Billikens, gotta be better than that! Well, January is over! Thank goodness! We had a good month, down south, but there were a few cooler days than normal, (our winter down here!) But back home, they just had an ice storm, that had cars running into each other all over! YIKES! Had a great dinner last night with my good friend from Long Island, Gus… Gus is a great American Story… He owns and operates the Candy Kitchen in South Hampton…I love listening to his stories! I don’t think I’ll need to eat for a day or two after all I ate last night! Big Head Todd, and the Monsters take us to the finish line today with their song: Tomorrow Never Comes… Don’t know that group? Check them out! I hope you have a Wonderful Wednesday today, and please Be Good to Yourself!
Chuck Butler