It’s Turkey Day!

  • currencies & metals see a dollar rally from left field!
  • What’s going on in Japan?

Good Day… And a Wonderful Wednesday to you! The day before Thanksgiving, and tonight is the busiest night out of the year, as all the college students that have been gone, come home, and go out to meet up with their high school friends…  Did you remember that I would be out of pocket yesterday? NO? Well then… good! Humble Pie greets me this morning with their classic rock song: I Don’t Need No Doctor! 

Well, Pfennig tradition calls for this… here we go! 

Turkey for me, turkey for you

Let’s eat the turkey in my big brown shoe

Love to eat the turkey at the table

I once saw a movie with Betty Grable… 

courtesy of Adam Sandler! 

Ok…  here we go with a 2-day breakdown again… On Monday this week the dollar continued to get sold, and ended the day down almost 6 index points, to 1,239…  But Gold couldn’t find enough buyers to get it out of the early morning red, and ended up down $3.50 to end the day at $1,978.60… Silver never did fight back from its early morning loss and ended the day down 30-cents, for an end of day price of $23.51… 

The price of Oil remained in the $77 handle… And while the dollar didn’t get bought, bonds did, and the 10-year’s yield fell to 4.42%.

And while I was on a plane coming back home yesterday, the dollar got… sold early, but recovered to end the day at 1,240… I guess I was looking for the PPT the other day, and look who I found?  Oh well, the cows are in the barn, on this folks… I do believe we’re heading to a long period of dollar weakness…  Gold had a smash up day going, and at one point it had traded past $2,000 to $2,002 and change… But some last minute heroics by the short paper traders saw that Gold only gained $20 on the day, to end the day at $1,998… Ever sooooo, close to $2,000, once again!  Silver had about the same trading pattern as Gold did, so to save you from the theatrics of how it all went, I’ll just say that Silver gained 31-cents on the day, to close at $23.82…   The price of Oil remained in the $77 handle, and Bonds were adrift in a sea of darkness all day with the 10-year’s yield ending the day at 4.41%

In the overnight markets last night… The PPT’s foray into the currency markets yesterday, led to the overnight traders buying some more dollars. The BBDXY is up 1 index point to start the day today… The euro is hanging on to the 1.09 figure, so not all’s lost, after the rally from left field for the dollar, yesterday…  Gold is up $4 in the early trading this morning, which brings Gold back above $2,000… And Silver is up 4-cents to start the day… 

There’s some suspicious trading in Oil going on right now… I say that because our friends (NOT!) at OPEC are going to be starting a meeting today, and by all accounts that have been observing what the OPEC members have been saying, the thought here is that they will call for more production cuts, which should be a feather in the hat of the price of Oil… But, as I look at the WTI price this morning, Oil has slipped $2 and start the day, and the OPEC meeting trading with a $75 handle… 

And Bonds continue to get bought… I just don’t see what the attraction here is, but somebody does… And the 10-year’s yield has fallen to 4.37%… Well, I say I don’t see what is going on here, but I really do… You see, housing was teetering, just yesterday, it was announced that Housing Starts fell from the sky, back to 2010 levels… Well, the Gov’t can’t have that going on in the middle of an election year that’s coming…  and why is that? Because mortgage rates were getting too high, and mortgage rates are derived from the 10-year Treasury… So, here’s the solution to that bag of worms… Get the 10-year Treasury’s yield to drop…  How to do that? Buy it like there’s no tomorrow, and who’s doing the buying? Ahem… You know who… 

Ok… longtime readers know my affection for the writing of one Grant Williams, he of Things That Make You Go Hmmmm… fame…  Well, he had this bit in his latest letter, and I found it very interesting regarding Japan…  ““When  we  normalize  short-term interest  rates,  we  will have  to  be  careful about  what will  happen to  financial institutions, what will happen to borrowers of   money   in   general   and   what   will   happen   to   aggregate  demand,”  Ueda  said. “

Now Ueda is the Bank of Japan Gov. and did you catch what he said? He didn’t say “if we normalize rate”, he said “When” we normalize rates… OMG! You mean to tell me that the Bank Of Japan (BOJ) is seriously thinking about normalizing interest rates? 

What on earth would that do to the U.S.’ s plight of finding buyers for their debt / bonds? Thinking about this gives me a headache, but, I’ll carry through here… Buyers of all kinds, Gov, Corp, Personal, hedge funds, Pension funds, etc.  have all ignored Japan for decades now… And the BOJ has already said that they were dropping their Yield Curve Control… So, IF the BOJ is serious about returning to normal rates, then Japanese bonds would become something that all those buyers above might be interested in again, and that would take buyers away from U.S. debt/ bonds… Uh-Oh!    

PS… and just when the U.S. has a ton of maturities coming due, and has to roll them into new bonds, in addition to the new bonds that will finance new debt…   

I ask myself each and every day…. “Am I the only one seeing this problem?” Because the markets sure don’t see it as a problem, hedge funds don’t see it as a problem, Pension and Retirement funds don’t see it as a problem, and I could go on…  or, as has been the case with everything in my career of writing, they seem so evident to me, but they aren’t imminent at the moment… But they will, eventually… 

I know, I know, today is the day before Thanksgiving, and I need to be more upbeat, but I want to tell you this now, so maybe you’ll hear me later… I AM UPBEAT THIS MORNING!  

You should be around me when I’m down in the dumps… Like Monday, I was here by myself, and my stomach went bonkers on me… I had plans to go out to dinner for my last night here, but instead, had to settle for saltines and water…  Oh, those 3rd world problems, eh? 

The U.S. Data Cupboard today has Durable Goods Orders for Rocktober… I suspect that they will print negative, but then that’s just me looking back at Factory Orders which were negative… On Monday, we saw the Leading Indicators for Rocktober, and they were negative once again… For the 19th consecutive month, they have fallen… The last time that had happened was the great financial recession of 2007-2008…   I know, the powers that be still haven’t said that we’re in a recession, but lordy, does it ever feel like one with all these negative economic prints!  I’m just saying… 

To recap… The dollar got bought, to a degree, last night, after suffering through late last week’s price collapse in the dollar, the PPT has done the trick once again, and yesterday the dollar had a rally that came from left field… UGH!  What’s going on in Japan? Chuck has his finger on the pulse there… And the economic reports just keep printing negative, and the sheeple go along with the Company line, that everything is funky dory… I cringe, thinking about that, so let’s forget that I said that and go make sure our Turkeys are thawed!   

For What It’s Worth…  I found this article on Bloomberg, while looking for something else… It’s about how China and the Saudis have signed a currency swap agreement… I remember telling audiences that when this happened, we would begin to see the end of the dollar as a reserve currency… So, now it’s happened… And the article can be found here: China, Saudi Arabia Central Banks Sign Currency Swap – Bloomberg

Or, here’s your snippet: “China and Saudi Arabia have signed a local-currency swap agreement worth around $7 billion, deepening their ties as countries across the Middle East look to shift more of their non-oil trade away from the dollar.

The two countries’ central banks have agreed on a three-year deal for a maximum of 50 billion yuan or 26 billion riyals, according to their separate statements on Monday. China, which has been promoting the yuan’s use in transactions with major energy and commodity exporters, is Saudi Arabia’s biggest trade partner.

The swap arrangement will “help strengthen financial cooperation” and “facilitate more convenient trade and investment” between the two countries, the People’s Bank of China said in a statement. The Saudi central bank made similar comments.

The deal is the latest sign of strengthening relations between Beijing and Riyadh. Though Saudi Arabia has long been one of China’s main suppliers of oil, business ties have expanded in recent years, with Saudi Aramco investing billions of dollars in China’s petrochemicals sector and the kingdom trying to attract Chinese tech companies.”

Chuck again… See what I was talking about earlier this morning about me seeing stuff that’s going to happen, and then eventually it does? It had to be at least 10 years ago that I stood on that stage with a crowd of people all around me in chairs, on the floor, standing against the wall, and I described the currency swap agreements that China was getting other countries, mainly their trading partners to sign with them, agreeing to remove dollars from the terms of the transaction and only use each respective country’s currency instead of dollars…  At first these were small countries, but then the larger countries began to sign the agreements with China, and that’s when I told the audience that when oil is no longer priced for everyone in dollars, it would begin the dollar circling the bowl…   And now… 10 years later… 

Market Prices 11/22/2023: American Style: A$ .6561, kiwi .6035, C$ .7290, euro 1.0906, sterling 1.2534, Swiss $1.1314, European Style: rand 18.6256, krone 10.7183, SEK 10.4382, forint 349.96, zloty 4.0010, koruna 22.4963, RUB 88.35, yen 148.75, sing 1.3409, HKD 7.7959, INR 83.32, China 7.1503, peso 17.19, BRL 4.8863, BBDXY 1,241.18, Dollar Index 103.66, Oil $75.03, 10-year 4.37%, Silver $23.86, Platinum $939.00, Palladium $1,077.00, Copper $3.74, and Gold… $2002.06

That’s it for today, and this week… A short week, but… I look at this way… 16 years ago, I didn’t know if I would still be here today, and look! I am here! So, I take things as they are… roll with the punches… my favorite saying is: it is, what it is…  As Popeye used to say… “I yam what I yam, and that’s all that I yam”…  I just have one question for the airlines… Since when do you allow passengers that can walk on a plane, get on before the wheelchair people get on? I’ll hang up and listen to the answer…  I’m going to smoke a turkey this year, that’s in addition to the turkey that Kathy will roast in the oven…  The Thanksgiving clan continues to grow… I hope it’s not too cold outside tomorrow! If it is cold, then I’ll wish I hadn’t volunteered to smoke a turkey this year! I do believe that all 3 of my kids, and their families will be here tomorrow, Yahoo!  It’s that time of year, when I don’t get to see them that often… And the girls always make me smile…Dawn, Delaney, Rachel, Evie, and Grace!  The Moody Blues take us to the finish line today, with their song from the Seventh Sojourn album (one of my all-time fave Albums): Isn’t Life Strange….  I hope you have a Wonderful Wednesday today, and a truly Blessed Thanksgiving tomorrow… I’ll talk to you next on Monday next week… Please remember to Be Good To Yourself!

Chuck Butler