June 12, 2023
* Currencies & metals are stuck in the mud…
* What surprises will CPI have for us tomorrow?
Good Day… And a Marvelous Monday to you! So… How are you today? It’s June 12, 2023, and summer is just 10 days away… We didn’t experience any summer like weather here yesterday, as the temps never got out of the 60’s, and there was rain all over… The Cardinals got their game in without any rain delays, but I think it would have been better to have the game postponed! UGH! There’s been some carving down of the number of short positions in Silver lately, so we’ll look into that, and see what’s up with the U.S. data… That, and more in today’s Pfennig… The Little River Band greets me this morning with their song: Happy Anniversary! How appropriate for that song to come up today…
Well, the dollar hasn’t really gone any where but in a tight range, on Friday… I think traders are sitting there waiting for hte FOMC announcement, which will come on Wednesday afternoon… But on Thursday of last week, The BBDXY, fell from 1244 on Wednesday to 1234.24, and then on Friday the dollar was shown some love and the BBDXY gained less than a point to 1,235… I would have to say that if traders were real fundamental traders, they would look at this weeks FOMC announcement and say, I’m taking a bet that the FOMC pauses, and that should hurt the dollar… But as we already know, funadmentals have taken a back seat to “sentiment” by the traders… Either way, the euro has pushed higher in the 1.07 handle, and once again, the currencies look perky… How many times in the past has the PPT, and their exchange stabilization Fund come in and knocked that smile right off the faces of the currencies?
Gold and Silver rallied strongly on Thursday, with Gold gaining $25, and Silver gaining 82-cents! Gold saww some profit taking on Friday, and closed down $3.90 at $1,60.70, and Silver was able to gain on Friday but only a few pennies, and ended the week $24.42… Ed Steer does a great job at detailing the short positions in the metals, especially Gold & Silver.. .Each Saturday, in Ed’s letter, which you can find and subscribe to if that suits you, and that can be found here: Ed Steer’s Gold and Silver Digest (edsteergoldsilver.com) In his last week’s Saturday letter, hie talked about how the short positions in Silver have been droppeing, I remember when it used to take 185 days of prodution to meet the number of ounces shold short… Well, in Ed’s Saturday report, he reported the number of days of production to have dropped to 138!!! That’s still a preposterous number of short positions, as you can see the thrill of shorting Silver has waned a bit… And that should be a good thing for Silver going forwar!
The yield on the 10-year rose to 3.75% on Friday, last.. the 10-year’s yield is slowly picking up steam once again… Ed Steer also had an aritcle highlighted last week, and this is what he had to say about that: “As is always the case, the Fed was buying treasuries hand over fist when required to prevent interest rates from rising across the yield curve.”
So, remember when I said that it was problaby the Fed Heads doing the buying of the 10-year in large chunks? Look who was right… I’m just saying…
In the overnight markets last night…. There was’t much to talk about… The BBDXY is still 1,233, Silver is flat, and Gold is up $3 to start the day. I’m convinced that everyone and their brother, their 2nd cousin, and his BFF are waiting for the FOMC announcement that will take place on Wednesday afternoon… The price of Oil has slid to a $68 handle, with traders and investors saying to the Saudi’s and the production cuts, neener, neener, neener! With the price Of oil floundering, the Russian ruble is not faring too well, either… The rest of of the Petrol Currencies, like the Norwegian krone, Brazilan real, Canadian dollar are all doing quite well these days, but not the ruble…
I have to talk about the stupid CPI for May that will print tomorrow… This report is key as it will either show that the Fed Heads’ earlier 10 rate hikes have begun to work, or… it will show that there is more work , in rate hikes, to do. Since this report is scheduled to print the day before the FOMC meeting, it will hang in the air and be present all around the meeting room in the Eccles Bldg, where the FOMC meets… I’m convinces that the Fed Heads know all to well that to stop hiking rates now is a mistake, but on the other hand, their dark side bosses don’t like what’s happened to their stock portfolios, and therefore I believe that the fix is in… The CPI report will be lackluster, and not showing real inflation gains, and the will allow the Fed Heads to pause the next day, pointing to the weak inflation report…
There’s markets manipulation all around us every day, why not manipulate the stupid CPI to have it read what you want it to say? The stupid CPI already has a ton of hedonic adjustments that were put in place during the Clinton administration… Yeah, Clinton and Big Al Greenspan did the dirty deed, done cheap… But hey! look at all the people that have been able to buy a home with lower mortgage rates… Oh brother! does the mortgage problems of 2007/08 ring a bell? I’ll stop now and move along…
Copper is finally reacting to all the talk of a shortage in the metal that is coming… It took Copper down to $3.65, before traders and investors started to realize that was really stupid, and began to buy it again… Copper is a great indication of rising inflation, so what do you think? Is inflation going to come back strong? Or just whimper away? You all know that I’m of the opinion that inflation is very sticky and will be difficult to move back to the FEd Heads’ preferred rate of 2%, when interest rates are higher than the inflation rate by at least 300 Basis Points (3%)… And this rally in Copper is proof to me that inflation isn’t going to whimper away… I’m just saying,,,,
I was rereading James Rickards book “The Death of Money” this past weeked, while I was alone on my own, and then grandson, Braden, walked in from outside, and asked me wha I was reading… I told him, Braden, in your lifetime, there will be no more folding dollars, 5’s, 10’s 20’s 50’s 100 and so on… I explained to him how the Gov’t wants to control our spending, and they can do that with digital currency… I walked away from him, and he sat their thinking, I could see the lght bulb turn on over his hear… He then said, “that sounds convenient, but risky”.. .I told him, he was smarter than the elected representatives…
Good friend, Dennis Miller of www.milleronthemoney.com sent me a rant the other day… I give it you in his words? “”I read this morning where Schumer got the federal government to send $105 million to New York to help cover the cost of illegal immigrants.
Let me see if I have this right. The federal government is asking law abiding taxpayers to send money to subsidize the cost of sanctuary cities law breaking activities. Now what could possibly be wrong with that?” – Dennis Miller
Chuck agains… Yes money, contrary to what my mother taught me, does grow on trees , and it can be spent o the darndest things, no wonder the Debt Clock.org, tells in that in short, high school years, our debt in the U.S. will be $40 Tillion… I have to question whether or not, that will happen, becuase, I see the whole financial system impoding befor we get to $40 Rrillion… Let’s hope Im wrong about that!
The U.S. Data cupboard, last week, was awful… The Trade Deficit grew to 76 Billion April, and the Consumer Credit (read debt) fell in April but only from 26 Billion to 23 Billion… Now, one would like to think tht the Consumer debt falling by 3 Billion would be a good thing to happen, but lets’ get real here… $23 Billion is HUGE for Consumer to carry..
On Thursday all we had was the Weekly Initial Jobles Claims, which saw a huge upward spike, last week.. .the Initial claims rose to 261,000 from 233,000…
Friday’s cupboard was basiclly bare, as is today’s… So no further damage can the dollar suffer from economic data today…
The Data Cupboard this week will start out lackluster, but build to a crescendo… So, today the eye of the storm will move over us, and then the tail winds will do the damage later in the week…
To recap: The dollar got sold on Thursday last week, but range traded on Friday… The currencies are looking perky again, and Chuck reminds us the Exchange Stabilization Fund is always lurking in a dark alley, ready to pounce. Gold gained $25 on Thursday, and saw some pofit taking On Friday… Chuck points out that short position in Silver have been abating, and that’s a good thing… If ther ever comes a day, that there are no commercial short positions in Gold or Silver, that would indicate to me that these two metals would be soaring,, Probably not in my lifetime, but at some point in the futre it is going to me a un-profit bearing trade… The overnight markets last night didn’t have an OOOMPH to them either, so we start the week watching paint dry, and build as the week goes on…
For What it’s worth… Well, I’ve shown that I can’t get enought of Matthew Piepenburg’s writing, and so it is that I have his latest highlighted here today in the FWIW Section… This is about our debt… and it can be found here; Stories for Children: The US Economic Fairytale – Matterhorn – GoldSwitzerland
Or, here’s your snippet: “When Humpty Dumpty fell off the wall and took a big fall, “all the king’s horses and all the king’s men could not put Humpty-Dumpty together again.”
I see a similar fate for the US debt egg, whose cracks are just about, well… everywhere.
Cracks in the Debt Egg
The first obvious (but media ignored) signs of this breaking egg emerged in September of 2019, when the TBTF banks no longer trusted each other’s collateral and the repo markets spiked overnight, prompting Uncle Fed to be the lender of last resort to its spoiled little banking nephews.
This required hundreds and hundreds of billions in mouse-clicked liquidity.
But then again, what does a billion or trillion even mean anymore to a mouse-clicker and $31+T (and growing) Public debt?
Numbers, like debts, have effectively become abstractions in what I previously described as a “banalization of debt.”
Since the repo crisis, as Uncle Sam’s twin deficits expanded at a fairytale pace alongside rising rate policies which neutered the price of sovereign bonds and hence the balance sheets and the life-cycles of regional banks, the Humpty-Dumpty US arrived at yet another climatic debt-ceiling reality-check.
Can-Kicking the Breaking Egg
As predicted, this “crisis” was “solved” by a predictable can-kicking of its debt responsibilities (and reality-checks) into a post-election-cycle.
How politically convenient.
In fact, political convenience at the expense of economic common sense or fiscal accountability is the very hallmark of our math-blind yet power-smug “representatives” in DC.
For those paying attention, however, the US not only voted past it’s $31.4T debt ceiling, it removed/suspended that ceiling all together.
This effectively allows the children in DC to borrow and spend without limit until 2025.”
Chuck again… Great article, if you have the time click the link and have at tit! Remember back in Sept of 2019, when the repos were in the Pfennig nearly every day? And then suddenly, we forgot about them, did the banks suddenly get well? No our attention was diverted to Covid… I’ll say nothing more about thqt!
Market Prices 6/12/2023: American Style: A$.6764, kiwi .6140, C$ .7503, euro 1.0771, sterling 1.2569, Swiss $1.1050, European Sytle: rand 18.58, krone 10.8033, SEK 10.7910, forint 351.42, zloty 4.1227, koruna 22.0555, RUB 83.11, yen 139.34, sing 1.3428, HKD 7.8336, INR 82.43, China 7.1430, peso 17.43, BRL 4.8817, BBDXY 1,233.23, Dollar Index 103.43, Oil $68.56, 10-year 3.75%, Silver $24.23, Platinum $1,002.00, Palladium $1,323.00, Copper $3.79, and Gold… $1,963.12
That’s it for today… Another blown chance to win a series, as my beloved Cardinals lose 2 of 3 to the Reds… UGH! Our STL City SC team drew a tie in their game yesterday 1-1. Once again, I was not in the park to watch the game having to resport to watching it on my phone, as we traveled across the state of Missouri yesterday. The City team as been without their big goal scorer for a long time now, and it has affected the way they play… But they are in first place in their division, so it hasn’t hurt them too much! Well, Kathy & Chuck got married on this day in 1976, which makes this our 47th anniversary… It was a hot and sunny day back in 1976, lots of fun was had on the day, and then at the reception that night… Well, we spent the weekend, last, at Table Rock Lake, with son Andrew and his family, visiting the great hosts, Duane and Toni… I’m really getting fatigued during the day these days… and it makes it a pain for me to beg out of a boat ride, because I need a nap! Leo Sayer greets me this morning, with his song: When I Need You… I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler