Just One Day Of Dollar Selling…

Rocktober 24, 2022

* Currencies & metals rally on Friday

* But get sold again in the overnight markets, last night. 

Good Day… And a Marvelous Monday to you! Well, the Phillies made it to the World Series in 5 games VS the Padres, and the Astros only needed 4 games to send the Yankees home. So, it’s a World Series of two old National League foes, the Phillies and Astros… should be good !I had a wonderful time on Saturday, first off I got to spend the day with my oldest son (Amdrew), 2nd, we went to the Mizzou Homecoming game, and Mizzou won, and finally, we tailgated with Brian, who made us pizzas! We made it home safely on Saturday night, and I went downstairs, burned out, sat in my recliner and fell asleep! Sunday was a fun day too, as good friend, Duane, came back to town, and we sat outside watching the Chiefs win… I love the pageantry of college football, the band, the cheerleaders, the student body section, and the way the fans are true to their school, whether they be a teenager, or an old person like me.. I love it! It was a Gold Rush day at the stadium, and Andrew and I had on our Gold Mizzou shirts, along with the 55,000 of a total of 60,000 fans that did the same… (somehow 5,000 folks didn’t get the memo to wear Gold! ) Neil Young greets me this morning with his song: Till The Morning Comes…

Well, it was not a good day for the dollar on Friday, on what has become a rare day, the dollar got sold, and I mean got sold… The BBDXY lost over 11 index points, Gold gained $29, and the currencies smiled for the first time in a month of Sundays. I searched and searched yesterday for an article that talked about why the dollar got sold like it did, but there was nothing out there, It was as if the day never happened… So, then I put on my “got to figure this out” hat… And what I came up with was that the dollar had been so overbought for so long, that it was bound to have a day like that… There are rumors of a Treasury Bond problem out there, and there was the news that the U.S. sent Switzerland over $11 Billion in dollars for their use… Wait, What? Did we vote to send $11 Billion to Switzerland? I have nothing against the Swiss, other than they have a sketchy Central Bank history… But as long as we’re going into debt, as a country, we might as well be spending the money at home, eh?

So… like I said, Gold gained $29.80 on Friday to close the week at $1,658.90, and Silver gained 78-cents, to close the week at $19.52… Now, I had to wonder where the boys in the band were on Friday, had they already closed up shop and headed for the Hamptons? Or is this part of their “trap”?  Short the heck out of Gold & Silver, causing the price to drop like rock, closing out their shorts with a profit, then turn around and buy Gold & Silver Futures, causing the price to gain, until it gets to look like it should look, and then start the shorting all over again, thus booking sales on their buys…   And this is why I always say, don’t get caught up in the “trap”… Buy it and forget it…  Got Gold?

The euro climbed to the mid 98-cent level on Friday, and get this… The Japanese yen rallied on Friday! It’s being thought that the Bank of Japan (BOJ) was in selling dollars buying yen, and that cause a some yen traders to join in and the yen had its biggest one day move VS the dollar in quite some time! I guess the BOJ got tired of waiting for everyone else in the world to join in them in selling dollars, and decided to go it alone… Of course if the BOJ had rounded up the boys, and got them all to intervene at the same time, sort of like a Plaza Accord, then we would have something to talk about, without that sort of Accord, the yen is bound to return to being the whipping boy of the dollar…

The price of Oil was steady Eddie on Friday and ended the week at $85… I read a report this past week that the U.S. “The US has just 25 days of diesel supply, the lowest since 2008, according to the Energy Information Administration. At the same time, the four-week rolling average of distillates supplied, a proxy for demand, rose to its highest seasonal level since 2007.” – Bloomberg.com

Now that’s scary isn’t it? Bill Bonner tells us about the problems here: “In America, too, rising energy prices have yet to cause a crisis. But diesel fuel is already running low. 

Energy is food; Food is energy

When you eat, you are eating energy. The sun’s energy produces fruits, grains and vegetables. These are fed to animals to produce meat.

But even before a single sprout appears in a field, energy has already contributed to the production. Soil has been tilled, usually by giant diesel-fed tractors… it has been raked… it has often also been treated with herbicide, insecticide, and fertilizer, made, delivered, and applied using oil and gas.” – Bill Bonner @ 

In the overnight markets last night… The dollar selling ended… Hmmm…  Well, at least that pretty much makes my thought about the dollar merely being very overbought, and that brought about some selling to take profits, look pretty good, eh? The BBDXY has gained 7 index points overnight, and Gold is down $9 to start the day. The price of Oil has slipped a buck to trade with a $84 handle this morning, and bonds are steady Eddie…

Every day I call up the price of Copper, thinking that today is going to be the day, it’s price finally relates to the shortage/ tightness of the physical market. But it wasn’t today, UGH!  I did find this on Bloomberg.com, though, “Copper prices don’t reflect a “strikingly tight” physical market, according to the world’s largest publicly-traded producer of the metal used in everything from computer chips to electric vehicles.

Macroeconomic headwinds have pushed copper futures down almost 30% from a peak in March, despite brisk demand and shrinking inventories that are nearing historical lows.

It’s “striking how negative financial markets feel about this market and yet the physical market is so tight,” said Richard Adkerson, chief executive officer of Freeport-McMoRan Inc.

“We’re not seeing customers scaling back orders. Customers are really fighting to get products,” Adkerson said Thursday during a conference call with analyst s after the miner reported adjusted third-quarter per-share profit that exceeded estimates.”

Chuck again… So, Copper, like Silver is seeing its price being kept down, even with an extreme shortage in these two physical markets. How long can this situation remain viable? How long can the forces that be, control the price of these metals? Only the Shadow Knows….

Everything is pointing to a deep recession folks… The neon red arrow is pointing that way, and so is the Leading Indicators report that printed last Friday, and Showed us that The economy sent a low-key signal Thursday that a recession is looming.

According to the Conference Board’s Leading Economic Indicators index, conditions worsened in September, with the gauge down 0.4% from the month before and off 2.8% for the six-month period.

“The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before year end,” said Ataman Ozyildirim, senior director of economics at the Conference Board.

Ozyildrim noted that the weakness in the index was “widespread” as high inflation, a decelerating jobs picture and tighter credit conditions are pressuring the economy.”

Chuck again… I’ve explained in the past that Capacity Utilization and the Leading Indicators are the only two forward looking pieces of data that we see printed each month. The Leading Indicator data is usually overlooked, until that is, until it goes negative for 3 consecutive months…

The U.S. Data Cupboard this week is spotty, as it will have some real economic data, like the first look at 3rd QTR GDP, and so on, on some days, and on others it will be lacking…  We start the final week of Rocktober, with The U.S. Manufacturing PMI… this data has been slipping by small amounts in recent prints, and I would expect this print to be lower than last months 51.8 figure.

To recap… The dollar got sold like funnel cakes at a State Fair on Friday, last week, and an overly overbought dollar is the only thing that Chuck can point to as to the reason we say the first day of dollar selling like that in a month of Sundays. Gold gained $29 on Friday, and Silver gain $78-cents, so it was a bad day for the dollar… America has only 25 days of Diesel supply left in reserves… Chuck is very concerned about that going forward. And the Leading Indicators are telling us to batten down the hatches… at least that’s my version of what they are telling us!

For What It’s Worth… Since I mentioned this earlier this morning, I thought it best to highlight it in the FWIW section this morning. This article is about the Fed sending $11 Billion to Switzerland, and it can be found here: Fed Quietly Sends Record $11 Billion To Switzerland As Dollar Funding Shockwave Crushes Central Banks (nationandstate.com)

Or, here’s your snippet: “Stocks are surging today amid a dovish one-two punch from Fed whisperer Nick Timiraos who hinted that the time is coming to reassess the pace of rate hikes, followed a few hours later by the otherwise hawkish Mary Daly who also suggested that the Fed may be moving too fast while bringing up the sensitive topic of broken markets, and the reason for this particular dovish reversal and jawboning is becoming increasingly clear: the same reason we have been warning for the past year that the Fed’s tightening campaign, now in its terminal stages, will inevitably break something which will manifest itself first in a worldwide dollar shortage and short-squeeze crisis, as global USD funding markets grind to a halt.

Of course, this is good news, because as BofA Chief Investment Strategist Michael Hartnett (whose latest weekly note we will dissect shortly) is fond of saying “Markets stop panicking when central banks start panicking.”

So in what may be the best news to shell-shocked bulls after the worst September and worst Q3 in generations, in a harrowing year for markets, central banks are starting to panic more with every passing day. First it was the BoJ with its September intervention, then the BoE with its bailout of pensions, then the BoJ again with its second consecutive injection of billions of U.S. dollars into the market – consider the paradox: there is such a massive USD short squeeze out there that it was the Bank of Japan that was compelled to inject approximately $40 billion in USD today (in only its second intervention this century) to prop up the yen since the Fed won’t lift a finger…and now, for the third week in a row, it’s Switzerland’s turn.

Recall that one month ago, after the (first) panicked pivot by the BoE, when global markets were in free fall, we said that markets desperately needed some words of encouragement from the Fed, or failing that – and with the dollar soaring to new all time highs every day – the Fed had to make some preemptive announcement on USD FX swap lines, if only to reassure global markets that amid this historic, U.S. dollar short squeeze, at least someone can and will print as many as are needed to avoid systemic collapse.”

Chuck again… how, after all the currency printing in the past 5 years, is there a dollar shortage?  Oh, that’s right, it all went to the Casino Banks! And stimmy checks! 

Market Prices 10/24, 2022: American Style: A$.6298, kiwi .5687, C$ .7292, euro .9826, sterling 1.1327, Swiss .9983, European Style: rand 18.3280, krone 10.5726, SEK 11.2666, forint 419.63, zloty 4.8716, koruna 24.9028, RUB 61.35, yen 149.35, sing 1.4233, HKD 7.8497, INR 82.65, China 7.2627, peso 19.98, BRL 5.1635, BBDXY 1,342.34, Dollar Index 112.25, Oil $84.18, 10-year 4.17%, Silver $19.23, Platinum 936.00, Palladium $2,014.00, Copper $3.43, and Gold… $1,648.89

That’s it for today…  Don’t know what came over me, but I had a very difficult time sleeping last night, finally at 5 am I got up and began to write… I tried 3 different sleeping arrangements, and none of them held the promise of sound sleep for more than 2 hours… Oh, poor, poor pitiful me! (Linda Ronstadt) The cold weather that crept up on us earlier last week, gave way to normal temps for this time of year, and that made me very happy, given my distaste for cold weather! Our Blues are starting the season on the right skate, and have won their first 3 games, and get back on the ice tonight against Winnipeg… Let’s Go Blues! If my beloved Mizzou Tigers would stop shooting themselves in the foot, they might win a game where the defense doesn’t have to make a stand to win the game… UGH!  But a W is a W, right? Last week I told you that it had been 2 years since I gave up sweets, but I had forgotten that I cheated while in Florida, last week, and had pineapple cobbler… Just thought I would come clean on that one! The full 10+ minute  live version of Loggins & Messina’s song: Angry Eyes, takes us to the finish line today… I hope you have a Marvelous Monday to day, and please remember to Be Good To Yourself!

Chuck Butler