- the dollar continues to gain VS all currencies
- the BLS is up to their old tricks again!
Good day… And a Wonderful Wednesday to one and all! Well, tomorrow I finally go to Houston, to MD Anderson Cancer Clinic…. Bright and early my plane leaves, so no Pfennig tomorrow. And so that leaves today’s letter the last of this week… And I start my annual Christmas vacation after tomorrow’s letter… So, you won’t be having me complain to you about the dollar being strong, or the dolts in Congress and the Fed/ Cabal/ Cartel until January 2025…. Miss me already? HA! Vince Guaraldi greets me this morning with his version of the song: What Child Is This?
The dollar bugs backed off yesterday, and the BBDXY remained trading 1,289…. And that’s where it closed yesterday.. But, at that level, the euro remained below the 1.05 figure and the rest of the currencies…. Well, you know the story there…. Today is a FOMC Day, and the FOMC will announce that they have cut the Fed Funds rate 25 Basis Points…. I have no crystal ball here, just my thoughts and the strong data yesterday isn’t going to sway their minds to not cut, in my humble opinion…. The stock jockeys will get a reprieve from their recent weakness in stocks, and the bond boys will mostl likely not be influenced by the rate cut….
Gold saw its early morning gain of $10 get whittled down to a gain of $5, and it closed yesterday at $2,647.70… Silver was down just 2 pennies yesterday and closed at $30.58…. I would think that a rate cut announcement today would get the metals out of the rut they’ve been in since last Thursday…. Of course, they were kicked into the rut by the short paper traders…. Maybe the thought of what Gold would do with a rate cut, is the reason the short paper traders decided to take a pound of flesh from Gold & Silver? Only the Shadow Knows,,,,
The price of Oil climbed back above the $70 handle yesterday, and the 10-year Treasury saw some buyers and the yield fell to 4.40%
In the overnight markets last night…. The dollar bumped higher once again in the overnight markets with the BBDXY gaining 1 index point to 1,290…. This ahead of the coming rate cut? I’m telling you now, so maybe you’ll listen to me later, all this dollar buying is like a salmon swimming against the current…. It’s not going to end well, but then that’s just me…. Gold is down to start the day today $11… And Silver is down 33-cents… All of this doesn’t make any logical sense to me, but then I’m not the sharpest tool in the toolbox,… But I am smarter than the average Bear!
The price of Oil remained trading with a $70 handle overnight, and the 10-year starts the day with a 4.40% yield… I have something for you on the 10-year in the FWIW section today… So, hold your horses, take your time getting there, for there’s more to read before you get to the FWIW section…..
Well, it appears that all my claims that the BLS’s jobs reports are shams, were first supported by the admission this past summer that 818,000 jobs had been added in error by the BLS… The Philadelphia Fed report told us this would happen and then it did! the Philadelphia Fed confirms – again – that I was right all along. And you would think that the BLS would stop with their shenanigans, but when the “boss” says make them look good, they do it….
So far in the 2nd half of the year, the Philadelphia Fed early benchmark estimates showed that instead of the 1.1% gain shown initially by the BLS, payroll jobs in the 50 states and the District of Columbia were actually down 0.1%! The labor picture in this country is NOT as good as the Gov’t would have you believe…. I’m just so glad that someone besides me is pointing out the BLS’s sham!
The U.S. Gov’t directs the BLS here… And they’re wanting to show that the labor market is strong under their watch and then allow the BLS to gradually revise the numbers under the next Gov’t’s watch…. That’s my theory and I’m sticking to it…. Just like my first wife was a young Elizabeth Taylor! Yeah, that’s the ticket!
OK, yesterday was our annual “shopping trip” for the guys…. We had a blast, and at the end of the day, it was like a day on the Butler Patio, with me holding court and explaining all sorts of things about the economy, tariffs, and Treasuries, to my good friends, Carl and Denny…. Everyone made it home safely, and so it was another successful shopping trip!
The Bank of Japan will meet today, tomorrow for them…. This is where the question runs deep with the markets, but with me, it’s plain and simple. The Bank of Japan will disappoint the markets again and leave rates unchanged,,, I’ll be a monkey’s uncle if they decide to hike rates…. I’m just saying….
I found this on www.moneymetals.com….. “When the Big Mac index was introduced in 1986, the average cost of a Big Mac — according to the classic jingle, “two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun” — was around $1.60.
When the jingle debuted, 8n 1974, the cost was around 65 cents. You could pay for it with a single dollar bill and expect change. Today, that price has risen to $5.69. The purchasing power of your dollar, according to burgernomics, has fallen 90 percent in the past 50 years “
I remember when the Economist magazine would make a BIG DEAL out of the BIG Mac Index results…. And we used to use this index as an indicator of dollar strength or weakness… That was back in my days at Mark Twain Bank! Through the years, the significance of this index has diminished but not with me!
I have to ask this question: Got Gold?
Well, I really wanted to make today’s letter special, given that it will be the last one until the new year…. But since today is all about the FOMC meeting and I’ve been that horse enough this week, (don’t worry no horses were harmed) So, I guess, I’ll just head to the Big Finish and start my vacation!
The U.S. Data Cupboard yesterday had the Nov. Retail Sales were stronger than Superman with a .7% increase…. I knew that the report would be quite strong, and it was! Industrial Production disappointed by not meeting expectations and only gaining .1% in Nov. And Capacity utilization dropped from 77.1% to 76.8%… But even the disappointng reports, couldn’t offset the euphoria of the strong Retail Salesl Oh, and I almost forgot… When you take Auto Sales out of Retail Sales, they only grew .2%….. Hmmmm…..
Todays Data Cupboard has some housing starts data, and of course the FOMC rate announcement this afternoon….
To recap…. The dollar continues to be strong, with no sign of weakness on the horizon, that is unless you think like Chuck and think that rates cuts are debasements of a currency, and that currency shouldn’t gain after a rate cut! Gold & Silver didn’t have bad days yesterday, but they didn’t have good days either! The BLS is up to their old tricks again, and The Big Mac Index shows a 90% purchasing power loss for the dollar in the past 50 years!
For What It’s Worth… This article is one that I think will scare the daylights out of you…. Well, maybe not, as you’re a tough hombre…. This is Pam and Russ Martens with their usual good reporting and this time they highlight something that I’ve been talking about….. The 10-year’s yield…. And it can be found here: The Head of Fixed Income at T. Rowe Price Makes the Scary Case for the 10-Year Treasury to Spike to 6 Percent
Or, here’s your snippet: “Arif Husain is the head of Global Fixed Income and Chief Investment Officer (CIO) of the Fixed Income Division of T. Rowe Price. He is also a member of the firm’s Management Committee. Husain holds a B.Sc. (honors) in banking and international finance from the City University London, Cass Business School. When Husain speaks, Wall Street listens.
What Husain has been saying since October is that the U.S. is on a collision course with higher interest rates.
In October, Husain released his interest rate outlook for the next six months, writing the following about the benchmark 10-year U.S. Treasury note, whose yield impacts mortgage rates and a wide swath of debt instruments:
“I think that the 10-year Treasury yield will test the 5.0% threshold in the next six months, steepening the yield curve. There are three dynamics at play: 1. Fed rate cuts could limit yield increases on short-maturity Treasury bills. 2. Ongoing issuance by the Treasury to fund the government’s deficit spending is flooding the market with new supply. 3. The Fed’s quantitative tightening has taken a large, reliable buyer of Treasuries out of the market, further skewing the balance of supply and demand in favor of higher yields.”
Husain’s analysis in October had yet to factor in the outcome of the U.S. presidential election. Now that there is no longer any doubt that President-elect Donald Trump and his promised tariffs and tax cuts must be factored into any interest rate forecast, Husain had this to say on a November 22 Global Market Webinar at T. Rowe Price when queried by his colleague, Investment Specialist Ritu Vohora…”
Chuck again… Of course that would be happening right now, if the Fed/ Cabal/ Cartel wasn’t doing their “yield curve control”… You now where they buy the yield curve to keep yields from exploding to the upside….
Market Prices 12/18/2024: American Style: A$ .6315, kiwi .5726, C$ .6982, euro 1.0467, sterling 1.2700, Swiss $1.1198, European Style; rand 18.0665, krone 11.2294, SEK 10.9610, forint 393.32, zloty 4.0651, koruna 23.9654, RUB 104.50, yen 153.86, sing 1.2517, HKD 7.7711, INR 84.95, China 7.2866, peso 20.12, BRL 6.1669, BBDXY 1,290, Dollar Index 107.20, Oil $70.57, 10-year 4.40%, Silver $30.26, Platinum $930.00, Palladium $928.00, Copper $4.16, and Gold…. $2,636.71
That’s it for today, and the next 2 weeks Sorry it seems so long, but with Christmas and New Year in there it stretches it out… I thought our Blues had turned a corner Monday night with a 3-2 victory over the Rangers, but then last night they laid an egg, and lost to the Devils….. UGH! Longtime readers know that I like to pen a Christmas Pfennig, so you haven’t heard the last from me yet! I’m so upset with a place that I had purchased some gifts from, They haven’t been delivered as yet, and it’s darn near impossible to get help from their website…. I sure hope they get here in time, as they were gifts for my girls…. If the doctors at MD Anderson come up with a solution for me, I’ll send out a quick note letting those of you who want to know, know….. Fingers crossed! The guys had so much fun yesterday, we laughed a lot and shared some stories, some true, some not so true (right, pack of lies?) And Thanks to Mike who was our driver! Vince Guaraldi takes us to the finish line with his version of the song: Christmas Time Is Here….. I hope you have a Wonderful Wednesday today, and Please Be Good To Yourself! I also hope that everyone who celebrates Christmas has a very Blessed Christmas, and you will be surrounde by loved ones….
Chuck Butler