New Zealand To End Bond Buying Program!

July 14, 2021

* Currencies get sold on Tuesday

* Strong inflation puts the dollar on the run in the overnight markets! 

Good Day… And a Wonderful Wednesday to you! The MLB All-Star Game was last night, and being a National League guy, I was hoping the NL would be able to stop the AL… But that didn’t happen, as the AL took an early lead, added to it later, and won the game… again! When I was a younger man, the NL won every year it seemed… But no more…  No rain yesterday for us here in the middle of the country, and starting today, we should have some regular summer weather here without rain, that is until Friday… Which means I won’t be having a driveway happy hour on Friday, UGH!  I started having driveway happy hours over a year ago, where we could all sit in our lawn chairs with sufficient distancing and talk to each other face to face, which to me beat the heck out of those Zoom happy hours! But when there’s a threat of rain, well, no happy hour for me! Bill Withers greets me this morning with his song: Lovely Day…  “And then I look at you, and I the world’s all-right with me”…

Well… there was no fighting back by the currencies yesterday after getting sold the previous night, the selling continued, and everyone was pointing to the stupid CPI report, as the reason for the dollar strength…  Well, if that’s the reason, then traders and investors are being quite myopic…  They’re only looking to higher interest rates sooner than later, and not that inflation is roaring and doesn’t appear to be “transitory” at all, and a currency is NOT supposed to gain while inflation is roaring…  At least that’s how currencies in the past 50 years have reacted to inflation… 

The BBDXY saw a HUGE jump higher yesterday going from 1,142 in the morning to 1.147 at the end of the day… The euro fell below 1.18 once again, and Gold and Silver couldn’t get their respective legs under them all day…  It was the same-0, same-0 for the metals, folks… Lots of short paper trades arriving at the COMEX as the CPI was being printed, and showing that inflation is rising at the fastest rate of 5.4% yoy since 2008!   Now tell me face to face that the dollar should be bought in times like this….  Because if you do, I’ll laugh hysterically at you, until you begin to laugh too! 

For the record… Gold finished the day up a whopping 80-cents to close at $1,808.30, and Silver couldn’t get started on the day and  lost 24-cents to close at $26.06…  Same-o, same-o for the metals it just drives me nuts!

You know what? I think my vacation is coming at the right time, because I was just about to go nuts on the U.S. Gov’t for manipulating the dollar and metals! But I’ve calmed a bit now… But it still irks me to no end that it’s just little old me out here screaming at the walls about manipulation of the dollar and metals… Spending your tax dollars to boot, to defend the dollar…  When you see those taxes taken out of your paycheck, do you even think about where or what they are going to?  The reason for taxes has been lost in the shuffle folks, and nowadays tax receipts are easy pickins’ for the folks at the Treasury, and Fed, and Congress…. We are in bad need of a leader folks, someone who can lead us out of this mess that we’ve gotten into…  I’m just saying…

In the overnight markets last night….  Well we had a reversal of patterns it seems last night… The overnight markets have seen dollar selling, and the currencies are rallying… So, maybe the Europeans and Asians looked at the inflation number and decided that enough dollar buying was enough… Maybe…  Gold and Silver are on the rally tracks in the early trading today, and it’s a sight for a sore eye! Gold is up $21.40 this morning, and Silver has added 41-cents to its price…  The BBDXY, which closed yesterday at 1,147, has slipped to 1,143 this morning…  So… Maybe… 

The price of Oil is rising once again, and this morning it trades with a $75 handle…  So, with the currencies on the rise, Gold & Silver on the rise, the price of Oil on the rise, I guess Bill Withers was right this morning when he sang It’s Going to be a Lovely Day! 

There was a great development overnight, that has the New Zealand dollar/ kiwi on the rally tracks this morning… The Reserve Bank of New Zealand (RBNZ) announced that they would bring their bond buying to an end…  WOW!  What’s this? The RBNZ attempting to bring back their glorious past, when Don Brash was Gov?  Well whatever their motives are, this IS the right thing to do, and traders have taken notice with a strong move higher for kiwi! 

Ok… how about some more  good news? Good Friend Dennis Miller sent me this last night… “Social Security recipients may get biggest cost-of-living bump in almost 40 years”  No wonder the Fed Heads keep saying that inflation is “Transitory”… otherwise if no one sees inflation, there can’t be inflation, right? And no inflation means no cost of living adjustment (COLA) for Social Security people, like me! But now the cat’s out of the bag regarding inflation, and now the U.S. Government is going to be backed into a corner, and have to raise Social Security payments… The article from NewBreak says: “The 69 million Americans who collect Social Security are on track to get the biggest cost-of-living hike since 1983, with one advocacy group for senior citizens projecting a 6.1% increase to benefits due to surging inflation.”

Well, just to throw some cold water on this news…. I’ll believe the increase, whatever it is, when I see it next year… I don’t trust the Gov’t. to make the COLA on time, or correctly… And what’s anyone going to do about it if it doesn’t seem correct?  Remember the media is in the Gov’t’s. back pocket so you’re not going to be able to shame or guilt the Gov’t in the newspaper!

UGH… You try to be upbeat on something, and it turns out to be negative after all! 

Well, this is quite the story, so let’s get into this… Yesterday, I received an note from one of my fave people in the world, the former Gov. of S. Carolina, and former ambassador to the U.N.  Nicki Haley… When she talks I listen folks… and you should too!  Ms. Haley had this to say, “Cuban citizens have gone to protesting Communism.” And the White House tried to spin this as “Cuban protesters yelling “freedom!” during anti-communist protests, where protesting rising COVID-19 cases” Wait, What? 

My favorite cartoonist, Ben Garrison, had this to say, “On Sunday Cuba experienced the largest protests against the brutal communism they are forced to live under in recent memory. If they were protesting against “rising COVID cases” why were they not wearing masks and shouting “Death to COVID.”

How many times have we heard those on the left make excuses for oppressive communist and socialist regimes, saying communism works, they just didn’t “do it right.”

Chuck again… What a bunch of bunk from the U.S. Gov’t… of course they’ll have a difficult time getting their socialism policies through the system if Cuba is revolting from socialism… So, just like inflation, the Gov’t tells us lies, and hopes that we don’t see what’s going on, for if don’t see it, it doesn’t exist, right?

And then there was this… PBS program Frontline had a very interesting program last night it focused on  how the Federal Reserve Bank has changed from a Central Bank to a Bail Out Kingpin…  Here’s a short snippet of what they talked about, which to me was the very first time a media member took on the Fed…  

The Fed’s radical makeover of itself began in December of 2007 when the Fed decided, on its own, that it had the authority to secretly pump out trillions of dollars in cumulative loans to prop up the mega banks on Wall Street, as well as to the foreign banks that were on the other side of Wall Street’s hundreds of trillions of dollars in derivative trades. The Fed secretly ran that program through at least July of 2010 according to the eventual audit that was conducted by the Government Accountability Office. (That audit only came about because Senator Bernie Sanders attached an amendment to the Dodd-Frank financial reform legislation of 2010.)

The Fed’s latest massive bailout operation began on September 17, 2019, months before there was a case of COVID-19 anywhere in the world. The full scope of this operation and other bailout programs remain a dark secret at the Fed, casting a pall over investors’ confidence in the transparency and stability of the U.S. financial system.

Frontline writers and producers James Jacoby and Anya Bourg, who are the force behind last night’s  Frontline documentary, The Power of the Fed, will now become part of a rarefied group of individuals who have mustered the determination to cut through the Fed’s insidiously cultivated armor of Fed-speak and its preposterous structure that allows it to create trillions of dollars of money electronically out of thin air for bailouts, with only feigned oversight by Congress.”

Chuck again… WOW! Well, it’s about time that someone or some people took on the Fed, and exposed what they are doing to the public!  I try to do that, but I only have so many readers, and PBS isn’t exactly NBC, but it is a member of the mass media, and I’m sure millions more people are aware of what the Fed is doing today, than were aware of their shenanigans yesterday! 

The U.S. Data Cupboard today has Producer Prices (PPI) which is wholesale inflation, that gets here first before being passed onto the consumer…  Yesterday, I told you that the Federal Budget was supposed to print, but if the numbers hadn’t been massaged, and cooked enough that it wouldn’t print until ready… Guess what didn’t print yesterday? 

The Fed’s Beige book will also print today, old news, of course, but it will be interesting to see what regions are reporting inflation increases…

To recap… The currencies and metals never did find their legs yesterday, and so the selling which began in the overnight markets, carried over to the U.S. session yesterday… The only asset that saw a gain yesterday was the price of Oil… Bonds got sold, currencies got sold, metals got sold, shoot Rudy, even stocks saw some selling..  Inflation was reported to have risen faster in the previous month at 5.4% than it has since 1983… But don’t worry, it’s only transitory…  Chuck talks about inflation again, and about what’s going on in Cuba…

Before we head to the Big Finish today I have an error to correct from yesterday… Ok… yesterday I made a writing faux pas… I was talking about how high interest rates haven’t always hurt Gold, but I said, “and while I will give them that higher interest rates are usually good for Gold”… When I obviously wanted to add a “not” in there… And say that higher interest rates are not usually good for Gold…  I could blame it on the rain… Or my fat fingers… or the sun got in my eyes… but I guess I’ll have to take the blame for this one… I guess my fat fingers just got ahead of themselves… Yeah, that’s it! That’s the ticket! And my first wife was a young Elizabeth Taylor!

For What It’s Worth… I’m going to pass on a FWIW article today, as I’ve had two articles I’ve highlighted above today, that could very well have been FWIW articles…  I do want to circle back on the PBS show last night, and give kudos to the people responsible for the program… We need more people to have the intestinal fortitude to show the public what the Fed is up to…  I’m just saying… 

Market Prices 7/14/2021: American Style: A$ .7473,  kiwi .7031, C$ .8024, euro 1.1824, sterling 1.3877, Swiss $1.09, European Style: rand 14.6077, krone 8.7245, SEK 8.6290,  forint 302.62,  zloty 3.8655,   koruna 21.6757, RUB 74.21, yen 110.33, sing 1.3527, HKD 7.7664, INR 74.41, China 6.4669, peso 19.93, BRL 5.17.10, BBDXY 1,143.20, Dollar Index 92.52,  Oil $75.02, 10-year 1.37%, Silver $26.47, Platinum $1,141.00, Palladium $2,919.00, Copper $4.21, and Gold… $1,829.70

That’s it for today… Well, I whined and complained enough that my oncologist found an appointment for me before I leave for vacation… I did ask nicely, and as charmingly as I can be… But when re-reading the note, it did sound whiny!  I just want to talk to a doctor about this sinus thing they found, that’s all…. So, it’s Thursday, but at noon, so I’ll still be able to write on my last day before my two-week annual summer vacation! I sat outside watching the All-Star Game last night, all by myself… no worries, I’m used to that, and I’m not going into the song by Eric Carmen again! I finally came inside about the 5th inning, because I was getting tired… Whenever I read a book, I get about 3 or 4 chapters into it, and my eyes begin to droop, and well, then I know it’s nap time! But I didn’t get any reading in yesterday until last night… I know that I’ll be  very happy to be away from these manipulated markets for two weeks… I might Tweet something while I’m gone, but probably not…  Alrighty then… here’s a real treat… Dion and The Belmonts take us to the finish line today with their song: The Wanderer… “Well, I’m the type of guy that never settles down…” I hope you have a Wonderful Wednesday and will please Be Good To Yourself!

Chuck Butler