It’s A FOMC Day! Big Deal?

  • Currencies and metals get whacked again on Tuesday!
  • Danielle Di Martino Booth visits the Pfennig today…

Good Day… And a Wonderful Wednesday to you!  And Welcome to May! It’s May Day as well, does anyone still use a May Pole? Well, my beloved Cardinals couldn’t stand prosperity yesterday, and had to settle for a split in the doubleheader with the Tigers… I really do not like the Cardinals manager, for a number of reasons, one of which is that he had no idea how to construct a lineup!  Oh, well… It was a rain on, rain off day here yesterday, and rain is expected this morning, and then clear sailing the rest of the week through next Monday…  So, that means I’ll be outside, reading a tone of new books that our friend, Karen, brought me yesterday… YAHOO! She supplied me with a plethora of books earlier this year too!  I won’t be able to read them all before I head home, unless I have Evelen Woods reading dynamics in my back pocket, and I don’t!  The first rendition of the band Journey greets me this morning with their song: Of A Lifetime… 

Well, I guess I was wrong about the Home Price Index… I really didn’t think that “hope for a rate cut” would get home prices soaring again… Here’s the skinny: “Enthusiasm for potential Fed cuts and lower mortgage rates appears to have supported buyer behavior, driving the 10- and 20-City Composites to new highs,’ Case-Shiller says”

Wonders never cease to amaze me…  and people’s outlooks being swayed by the media, never cease to amaze me either!  Gold lost $45 on Tuesday, and Silver lost 80-cents!  Both metals fell below levels I thought they would never revisit in the near future, but alas, I was proven wrong again! 

The dollar soared throughout yesterday, and ended the day adding 8 index points to the BBDXY index… The euro fell back below 1.07, and the Mexican peso went back over the 17 figure…  It was an absolutely ugly day…  The Employment Cost Index rose as I suspected it would, (_1.2%) and the dollar never looked back after that… Even a downward move in Consumer Confidence from 103 to 98, didn’t stop the dollar from wrecking the lives of the currencies… I found that Consumer Confidence data very interesting… And correct for once, but its still too high, as far as I’m concerned! 

Everything that wasn’t the dollar, got whacked yesterday… The price of Oil fell through the 82 handle and ended the day in the $81 handle, and bonds saw their recent buying stopped , and the 10-year’s yield rose to 4.66%…  

In the overnight markets last night…  Well, there was no ambush on the currencies and metals overnight, as the overnight markets probably were satisfied with the damage that was done to the asset classes during the day yesterday… The BBDXY starts today, where it ended yesterday at 1,266…  The price Gold is up $6 in the early trading today, and Silver is up 20-cents to start the day. Now Gold & Silver will have to pick of the pieces once again, and start building up again… Time to buy is now!  But then the time to buy Gold to the Chinese, apparently is any old time!  But I’m sure they are backing up the truck to take on heavy loads of physical Gold now with the price so much cheaper… 

The price of Oil has fallen out of bed, and Oil trades with an $80 handle this morning… What’s going on there? Well, apparently, it’s a double whammy for Oil, in that the cease fire talks in Gaza continue, and U.S. inventories have bulked up… What? people don’t drive any longer? The summer driving season is approaching quickly, so those inventories will be drawn down, I would think…  The 10-year’s yield has climbed back to near 4.70% this morning… So much for that rally that took place a few days ago… I still contend that the 10-year’s yield will hit 5% in the coming months… 

So, the dollar got bought up like it was going out of style and was on the clearance rack.  Or like funnel cakes at a State Fair!  You know what I always say when the dollar soars like this?  Either batten down the hatches or look to buy some currencies at deep discounts!  As my former colleague, Ty Keough, used to tell his customers, “when the dollar is strong, you can buy more of the currency!” 

Longtime readers know that I truly admire Danielle Di Martino Booth, as I used to quote her thoughts all the time, but that was before she started charging for her newsletter…  Anyway, this was on Yahoo yesterday, “The US economy is already in a downturn — and it could be following in the footsteps of China as the government assumes a growing amount of debt to prop up growth, Danielle DiMartino Booth, a veteran forecaster, says.

The chief strategist of QI Research has said for months that the US economy is already in a recession, despite Wall Street’s upbeat outlook for a soft landing. But a downturn is evident in the weakening job market, Booth said, pointing to recent downward revisions in monthly job-growth figures.”

Chuck again, you know the old saying that Great Minds think alike?  Well, I think if comes into play here, because I’ve said the same thing for months now! 

On a sidebar, years ago, I thought about charging for my newsletter… But it would be quite the undertaking, and I would have to employ a couple of people to keep the records, and so… I said, no, it’ll remain free until I actually am strapped for money and need to charge…  

Today is an FOMC Day!  Yes, we’ve waited 6 weeks for the Fed Heads to meet again… Remember in January and February when it was a slam-dunk that the Fed Heads would cut rates either in March or May, or maybe even both months? Well, March came and went with no rate cut, and I’m afraid that May will do the same… You know, the Fed Heads want to cut rates, they have an itchy rate cut finger on the trigger… But what’s a Fed Head to do, when inflation stopped falling and is now on the rebound, but your government needs lower rates so that they can issue debt at the lower rates?   In my humble country boy opinion… I think the Fed Heads will pass again on a rate cut, but try to hold on to the stock jockey’s attention by still talking about how they still expect inflation to recede and bring about a rate cut or two before year-end…    They would be lying of course, but what else do you expect from them? 

Well, this very disheartening article confirms what I’ve been saying for some time now, and that is, “Who is going to buy our debt as China, Russia, Indea and others back away from Treasuries?  Well, there was an article from a Chinese point of view on this on, that I have a piece of here: “China’s investment in US government bonds is fraught with risks, tepid returns and other vulnerabilities – all of which should motivate Beijing to unwind its holdings further and avoid being held “hostage” by Washington’s “exorbitant privileges”, a prominent scholar has said.

Di Dongsheng, vice-dean of Renmin University’s School of International Studies, warned the enormous sums of Chinese assets and capital parked in the US could be “taken hostage” by Washington if Beijing were to step up the defense of its sovereignty and territorial integrity.

“There’s no reason to load up on US Treasuries,” Di said in an article for the April issue of Contemporary International Relations, the journal of state think tank the China Institutes of Contemporary International Relations.

“We have seen how Washington treated Russia’s overseas assets, and its sequestration of German and Japanese assets during World War I and World War II.”

Chuck again… Doesn’t that scare the bejeebers out of you?  Rates will have to go way higher than they are to attract investors, and that will crush the financial system here in the U.S. …  I’m just saying…

Hey, if you won’t listen to me, will you listen to the folks at McDonalds? Those folks had to announce that they missed on their earnings forecasts, and that the reason for that was that they believe that the U.S. consumer is about ready to crack….  Apparently, it’s not just the folks at McDonalds… Some of America’s best-known corporations are saying their consumers are being pinched by inflation as prices continue rising. You would never have any inkling that’s the case, when every restaurant you go to is full… every plane ride is full… etc. But I suspect that its people cranking up the credit card debt… We’ll see in future reports if that’s correct, which I’m sure it is… 

So, other people are now saying what I’ve been saying all along, and that is that inflation is sticky… And it takes more than the rate hikes that the Fed Heads brought to the markets to defeat inflation… They need to stop the deficit spending! They need to hike rates well above the inflation rate! And they need to balance the budget… I’m just saying… 

The U.S. Data Cupboard today besides the FOMC meeting, will have the ISM Manufacturing Index for April and I expect it to fall back below the 50 level…  And the ADP Employment Report for April will also print, and I expect it to show weakness from the March print… Yesterday, this report was in the background, why? I have no idea, but first let me tell you that the Dallas Manufacturing index fell for the 4th straight month in April, and now this I found on “After miraculously surging to two years highs in Nov 2023, Chicago PMI has plunged for five straight months, with the last four months seeing the MoM declines accelerating. Against expectations of a rise to 45.0 (from March’s 41.4), April’s PMI data printed 37.9…click to enlarge.

That is the worst five-month collapse since Lehman…”

Chuck again… I’ll let that sink in a minute with you here…  The worst 5-month collapse since Lehman Brothers collapsed and that started the great financial meltdown of 2007-08… Yikes! 

To recap…  The short paper traders in Gold & Silver saw the Home Price Index yesterday, and saw that it had gone up, and decided to take that as an opportunity to sell Gold & Silver short… And they whacked the metals once again yesterday…  The dollar soared on the home price news, and it really was the last nail in the rate cut’s coffin… Danielle Di Martino Booth joins us this morning and Chuck found something from China that talks about speeding up China’s turning away Treasuries… Uh-Oh!  Currencies got sold, bonds got sold, Oil got sold, all the say day yesterday… So write that one off! 

For What It’s Worth… Well, I gave you a teaser above, and now here it is… This is an article that I found that quotes Farmers in the U.K. and their dire predictions for . consumers, and it can be found here: Farmers warn food aisles will soon be empty because of crushing conditions: ‘We are not in a good position’ (

Or, here’s your snippet: “The United Kingdom is facing dire food shortages, forcing prices to skyrocket, and experts predict this is only the beginning.

What’s happening?

According to a report by The Guardian, extreme weather is wreaking havoc on crops across the region. England experienced more rainfall during the past 18 months than it has over any 18-month period since record-keeping began in 1836.

Because the rain hasn’t stopped, many farmers have been unable to get crops such as potatoes, carrots, and wheat into the ground. “Usually, you get rain but there will be pockets of dry weather for two or three weeks at a time to do the planting. That simply hasn’t happened,” farmer Tom Allen-Stevens told The Guardian.

Farmers have also planted fewer potatoes, opting for less weather-dependent and financially secure crops. At the same time, many of the potatoes that have been planted are rotting in the ground.

“There is a concern that we won’t ever have the volumes [of potatoes] we had in the past in the future,” British Growers Association CEO Jack Ward told The Guardian. “We are not in a good position and it is 100% not sustainable,” Ward added.”

Chuck again… So why is this important to us here in the U.S.? Well… for a number of reasons, with the first being that I’ve always said that what effects the U.K. the U.S. suffers it too about 6 months later…  And second of all you wouldn’t expect the U.S. to allow their key ally to have starving people, would you? That would mean more deficit spending on our part here…. need iI say more?

Market Prices 5/1/2024: American Style: A$.6487, kiwi .5890, C$ .7261, euro 1.0672, sterling 1.2485, Swiss $1.0674, European Style: rand 18.6817, krone 11.0955, SEK 10.9959, forint 366.07, zloty 4.0673, koruna 23.5850, RUB 93.99, yen 157.89, sing 1.3646, HKD 7.8238, INR 83.43, China 7.2410, peso 17.11, BRL 5.1936, BBDXY 1,266.32, Dollar Index 106.30, Oil $80.81, 10-year 4.69%, Silver $26.56, Platinum $952.00, Palladium $962.00, Copper $4.54, and Gold… $2,293.50

That’s if for today… I’m still shaking my head over how Gold & Silver were treated yesterday…  akin to driving the car like a rental… or treating it like a mule… or a red-headed stepchild… All of those old adages went through my head yesterday as I watched Gold get sold… Probably, and most definitely, by short paper traders, once again… Day game again today, and it’ll be going on as the FOMC meets and makes their announcement…  Wanna bet what I’ll be paying attention to?  HA!  Have I told you lately how much I love the warm weather down here?  I have? Oh, sorry about repeating myself! Oh, I finally got the Pfennig Replies back and working yesterday, I’ve replied to most of the old ones, and apologized for the delayed response…  The Neon Trees take us to the finish line today with their one-hit wonder song: Everybody Talks… I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!

Chuck Butler