PCE Jumps Higher….

April 5, 2022

* the dollar starts to drift lower…

* how much did the Fed spend to save the swamp?

Good day and a Tom Terrific Tuesday to you. We’ll the college men’s basketball championship was played last night.. I have a very difficult time saying Congrats to Kansas on their win… Why? I’m from Missouri.. Nothing else needs to be added. I tried to stay awake for the end… but discretion was the better part of valor, and I succumbed to the sand man… The Easybeats greet me this morning with their great 60’s song: I’ve got Friday on my mind 

Well, the dollar started the day getting bought… but as the day went on, the dollar lost its hold on buyers, and ended the day basically flat… Gold saw the opposite trading pattern the dollar saw. Gold began the day getting bought, and by mid-day, Gold was up $14.00. But then ran into some short selling, that brought Gold’s gain on the day to just $7.60, to close the day at $1,934.20. And Silver lost 10-cents to close the day at $24.62…

The price of oil rebounded to gain $5.00 on the day, while bonds got bought once again to my surprise… Spoiler alert…. In a week or two my good friend, Dennis Miller of www.milleronthemoney.com will run an interview done with me on the potential of a Bond liquidity crisis… Having been a bond trader early in my career I have some insight to how that might come about… so, if you don’t  already get Dennis’ free letter, you might want to go to the website above and get signed up!

In the overnight markets last night…. The dollar drifted lower when you look at the BBDXY…. But in looking at the individual currencies, the euro has dropped below the 1.10 figure, but the Aussie dollar, A$, has rallied and trades this morning with a .76-cents tag… And kiwi is up to .70-cents!

The price of Copper jumped overnight and that plays well in the commodities sand box… The PCE inflation gauge just recorded a huge jump indicating that even this watered down data print show inflation is not letting up.. Bonds got sold overnight, and oil gel its $5 gain yesterday…

OK I’m going to go in a different direction this morning and give you a snippet of Pam & Russ Martens’ www.wallstreetonparade.com  Long time readers my recall me making a BIG deal about the Fed’s repos they began offering in Sept. 2019… here’s your snippet:” The Fed began its emergency repo loan operations on September 17, 2019 – months before there was a reported case of COVID-19 anywhere in the world. It was the first time the Fed had intervened with emergency repo loans since the financial crisis of 2008. The Fed’s repo loans continued throughout the fall of 2019 and into 2020. By Monday morning, March 9, 2020, news of the coronavirus was making headlines around the world and rattling stock markets. The Dow Jones Industrial Average (Dow) plunged 2,013.76 points that day. The Fed responded with one repo loan operation that day of $112.932 billion, which it pumped into 24 trading houses on Wall Street – its so-called “primary dealers.”

The Fed had calmed the market for the time being and on Tuesday, March 10, 2020, the Dow gained 1,167.14 points. (We can assume that the gain was aided by the fact that the Fed on March 10 had conducted two repo loan operations, pumping in a total of $168.625 billion.)

But panic set in again on Wednesday, March 11, 2020, with the Dow losing 1,464.94 points, despite the Fed conducting a one-day repo loan operation of $132.375 billion. The Fed interpreted that to mean that the Wall Street trading houses were thumbing their noses at short-term loans and wanted longer-term loans from the Fed. It would fulfill their wishes the very next day in a big way.

By early Thursday morning, March 12, a new panic had set in. Before the stock market opened at 9:30 a.m. in New York, S&P 500 futures had plunged 5 percent and were locked, limit-down. That led to a plunge of 7 percent in the S&P 500 Index shortly after the stock market opened at 9:30 a.m. in New York. That plunge triggered a circuit breaker which suspended trading for 15 minutes until 9:50 a.m. By the time the dust settled at the closing bell, the Dow had lost 2,352.60 points.

But now that we know the details of what the Fed did on March 12, it’s fair to question if the stock market could have lost 10,000 points that day but for the actions of the Fed.”

Chuck again…Why can’t the deep state allow markets to be markets and interest rates to be what they should?

The data cupboard yesterday saw negative prints for Factory Orders & Capital Equipment orders in Feb…Yet another sign that the U.S, economy is going nowhere… Today’s Data Cupboard doesn’t have much to move markets , but we do get 3 different Fed Heads talking today…. yawn….

To recap…it was a tale of two markets for the dollar and metals yesterday… Chuck wants everyone to know what the Fed did to save the swamp… and now everyone that didn’t benefit from all that cash get to deal with rising inflation..

For What It’s Worth…. This article came to me from the good folks at GATA, and it’s about how Russia will be directing the Gold price in the future, and it can be found here: Lawrence Lepard: We Stand on the Gold Launchpad – Palisades Gold Radio

Or here’s your snippet: “Tom welcomes Lawrence Lepard from Equity Management Associates to discuss the many things that have changed in just the past few months.

The actions of Russia will likely begin driving the price of gold. We’ve reached a tipping point not unlike when Charles de Gaulle began demanding gold in the 70s. Putin is hitting back economically. The seizure (theft) of reserves was a clear warning to many countries. The Ukraine/Russia conflict is equally an economic one.

Lawrence discusses the low valuations in commodities and the lack of capital investment in resources. Inflation appears to now be the norm.

The dollar could go higher because it’s still the best of the worst. The trend in purchasing power will continue to decline. He says, “Their drunk and they can’t stop drinking.”

Europe needs Russia’s oil and Putin is forcing a seat at the table. The West has ignored and treated Russia like a second-class citizen for too long. The arrogance of those in power is stunning, and Putin is not stupid. They are not used to someone standing up to them and winning. We are on the verge of another move higher in gold.

Margins and multiples in equities are going to come down and holding general stocks now makes no sense. “A huge trend change is coming… and you want to be on the right side of this. If you’re not investing in the right areas it’s going to be a very painful experience.”

Front running may be part of the equation for inflation. Wages aren’t likely to keep up, and it’s difficult to assess all the various parts of the inflation picture. It takes time to solve supply chain issues and find good workarounds. He states, “A capital system based on the correct allocation of capital will make more stuff for less. We need productivity.”

Chuck again… this article goes on further so click the link above should you find you need to read more.

Market prices 4/5/2022: American Style: A$ .7629, kiwi .7001, C$.8030, euro 1.0970, sterling 1.3131, Swiss 1.0801, European  Style: rand 14.5342,  krone 8.6980,  SEK 9.3744, forint 337.83, zloty 4.2159, koruna 22.1917, RUB 84.34, yen 122.88, sing 1.3556, HKD 7.8384, INR 75.09, China 6.3629, peso 19.81, BRL 4.5941, BBDXY 1,194.60, Dollar Index 99.01, 10-year 2.47%, Oil $104.53, silver $24.64, Platinum $1,003.00, Palladium $2,330.00, Copper $4.72, and Gold…. $1,939.50

That’s it for today…every year I watch the Final Four and the National Championship Game and imagine how cool it would be for my beloved Mizzou Tigers or St Louis University Billikens to be in those games! I truly believe that the Billikens will be loaded next year so watch out!  We’ll, hopefully my flight home tomorrow won’t be canceled like my two previous attempts to get home… That would put me back in the hood for The Cardinals opening day… hint, hint I’m available for the home Opener!  You know, just in case… Bob Marley takes us to the finish line today with his son: Three Little Birds… “people don’t worry about a thing, cause every little thing is gonna be alright”   I hope you have a Tom terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler