Manipulations Everwhere, They’re Everywhere!

May 7, 2018  

* Dollar continues to received the love 

* Chuck is a has been?

Good Day…  And a Marvelous Monday to you!  It’s not so much of a good day for me, as I’ve come down with a very nasty cold. My wife had it last week, and I guess she wasn’t satisfied keeping it to herself! I actually slept all day yesterday, and this morning I didn’t set an alarm because I figured when I woke up I would write…  So, here I am, starting the letter at least 4 hours later than usual… UGH! So, if I can stop coughing long enough to put some thoughts together this morning, that’ll be a real accomplishment! Blood Sweat & Tears greet me this morning with their song: Spinning Wheel… 

Well, it’s been a week now and the dollar is still feeling like people love it again, when in reality it’s just a short squeeze that caused this avalanche of dollar buying. Something will change soon enough.. At least that’s how I see it.  The euro has dropped below 1.20 and the rest of the currencies fall in line behind the euro on the ride downward VS the dollar.  Gold was able to punch out a gain on Friday, nothing much to speak of, but a gain nonetheless…  

And don’t look now, but the price of Oil has climbed to $70! 

The Jobs Jamboree on Friday was a disappointment for those looking for a rebound to March’s awful print, but were disappointed once again, when the BLS unveiled their hedonically adjusted total of jobs created in April, and they only totaled  164,000 (184,000 expected) and the AVG. Hourly Earnings only gained 0.1%…   And while the major media outlets don’t seem to ever care about the jobs created out of thin air by the BLS , I do, and last month’s total was 260,000…  So, do the math, right? We had a negative month of jobs creation, but the markets didn’t care, and kept the pressure on the currencies. 

The manipulations going on in the markets these days are something, and I sat down the other day an put this thought together… 

A few years ago, far away friend, Ed Steer, put me on the approved list of people to received the GATA emails. GATA stands for Gold Antitrust Action committee… And on Friday, their Secretary/ Treasurer, Chris Powell, had this to say about manipulated markets… “ No, mainstream financial news organizations are too scared to inquire or too instructed not to inquire about market rigging by central banks, though these days that rigging is the only “market” activity that matters and its documentation is lying around in the open in various places, freely available to anyone who has an interest in looking and thereby democratizing the world financial system.” – Chris Powell

Chuck again.. The days of wine and roses for fundamentally driven markets are over, folks… And old fundamentals followers like me, are being pushed to the side of the road, to make room for Central Bank manipulated markets… I’m an old has been now… When I was a youngster playing High School football, that’s what we called the guys who had graduated and weren’t good enough to play in college (back then hardly any of the kids at my school could go to college to begin with!) , and we would say, that guy was a “has been”… Well, I became a “has been” but only on my own accord… I could have played college football, but I was in love with music, and chose to travel the country in a VW Microbus, with bandmates, playing my guitar… But now, here I am again… I’m a “has been” again… And I don’t like it one iota! But what am I to do about it?
I can only write about it and hope that one day, someone with an ounce of gray matter will stand up and make it a point to change things… No more intervention, no more manipulation, no more PPT, and whomever else is responsible for this mess of markets that we are now facing…

OK, I’ll get down off my soapbox now… What a way to start a Monday morning, eh?

You know…  the U.S. data has been hit and miss a lot lately, which doesn’t bode well for an economy that is looking down the double barrel of more rate hikes…  I came across this data the other day, and thought this really tells a story…  the New York Fed’s six-month business activity outlook plunged from 44.1 last month… to a dismal 18.8.

According to Danielle DiMartino Booth, former adviser to the president of the Dallas Fed: “The 26-point move lower is worse than anything seen during the 2008–09 financial crisis and on par only with the one that followed Sept. 11.”

And  one more thing I noticed last week consumer spending slowed to its weakest pace in nearly five years last quarter.  More of that thought that I’ve expressed several times previously, that the U.S. consumer is Tapped Out…   

Nothing much but Consumer Credit (read Debt) in the U.S. Data Cupboard today…  I’ll be watching that data print though to see how much we’ve gone into debt this past month!    

To recap… the dollar still has the love of the markets and continues to take liberties with the currencies. Gold however, did find a way to gain on Friday, so that was a good thing!  I spend a lot of time talking about market manipulations today, so if you missed it, you’ll need to go back and read that again…  

For What It’s Worth…  this is a long-ish piece today to make up for my shortcomings… It’s Charles Hugh Smith talking about the economy and it can be found here:    

Or, here’s your snippet: “Corporate buybacks provide the key analogy for the economy as a whole.

Central banks have been running a grand experiment for 9 years, and now we’re about to find out if it succeeds or fails. For 9 unprecedented years, central banks have pushed the pedal of monetary stimulus to the metal: near-zero interest rates, monumental purchases of bonds, mortgage-backed securities, stocks and corporate bonds, injecting trillions of dollars, yuan, yen and euros into the global financial system, all in the name of promoting a “synchronized global recovery” that in many nations remains the weakest post-World War II recovery on record.

The two goals of this unprecedented stimulus were 1) bringing consumption forward and 2) generating a “wealth effect” as the owners of assets rising in value would translate their perception of feeling wealthier into more borrowing and consumption that would then feed a self-sustaining virtuous cycle of expansion.

The Federal Reserve has finally begun reducing its stimulus programs of near-zero interest rates and bond purchases, the idea being that the “recovery” is now robust enough to continue without the extraordinary monetary stimulus of the past 9 years since the Global Financial Meltdown of 2008-09.

Will the “synchronized global recovery” continue as interest rates rise and central bank assets purchases decline? Policy makers and economists evince confidence as they collectively hold their breath–is the recovery now self-sustaining?

The vaunted “wealth effect” was extremely asymmetric: only those in the top 5% who owned enough assets to experience a meaningful increase in wealth–those who bought assets years before the current bubble expanded, and the relative few households who own roughly 70% of all financial assets–and the few workers and entrepreneurs who benefited from an increasingly “winner take most” expansion.”  

Chuck Again… Thanks to Ed Steer for helping out with the FWIW piece today… 

Currencies today 5/7/18… American Style: A$ .7505, kiwi .7013, C$ .7772, euro 1.1923, sterling 1.3553, Swiss. $.9965, … European Style: rand 12.5547, krone 8.0558, SEK 8.8115, forint 263.63, zloty 3.5683, koruna 21.3945, RUB 62.56, yen 109.26, sing 1.3367,  HKD 7.8495, INR 67.21, China 6.3696, peso 19.37, BRL 3.5270, Dollar Index 92.88, Oil $70.25, 10-year 2.95%, Silver $16.47, Platinum $915.04, Palladium $980.10, and Gold… $1,312.70

That’s it for today…  sorry again for the tardiness, but when you need to rest you need to rest! I want to give a GREAT BIG SHOUTOUT to my darling granddaughter, Delaney  Grace, as she was picked to be in the Muni production of Annie this summer… The Muni is a BIG DEAL for us here in St. Louis!   Cards sweep the Cubs! That was some weekend of baseball!  After I slept all day yesterday, I was ready to watch the game last night (have I ever told you how much I dislike Sunday Night Baseball games?) but not prepared to go to the 14th inning, and so I didn’t see the walk off home run at 1 am this morning. Mike and the Mechanics take us to the finish line today with their song: Silent Running, with Paul Carack singing…  I have to go cough my fool head off now, so please go out and make this a Marvelous Monday, and Be Good To Yourself! 

Chuck Butler