Sidestepping Swift…

August 10, 2023

* Currencies & metals rally in the overnight markets

* Petrol Currencies perk up! 

Good Day… And a Tub Thumpin’ Thursday to one and all! I don’t feel much like Tub Thumpin’ today, so I’ll have to ask you all to step in for me… The end story here is that I’m not tolerating my new chemo… And the only way I can get myself to feel better each day, is to sleep the day away… Now, that’s not very productive is it? I tried to go to lunch yesterday, with good friend, Duane, but I barely touched my food, and barely made it home in time, to deal with my bad stomach. I aplogized to Dewey, and felt bad, that he had to not have a fun lunch…  I heard from a former colleague yesterday, one that I had worked with since she got out of college… It was great to hear from Jen McClain… Jet greets me this morning with their song: Are You Gonna Be My Girl?
Well, Monday, being Monday this week, with the dollar getting bought like funnel cakes at a State Fair, has been the outlier of the days so far this week… The dollar hasn’t been bought since Monday, but then it really hasn’t been sold too much either. Yesterday, the BBDXY was flat as a pancake (Head East), which meant the currencies were stuck in the mud. Gold however was NOT stuck in the mud, and lost more ground on the day, losing $11.60, to close at $1,914.40. Silver also lost ground yesterday, losing 11-cents to close at $22.74… I told you yesterday, that in past years, the summer months have not been kind to the metals… But I didn’t say that they’ve never been this unkind to the metals! And that’s why I’m convinced that the short paper traders are at work here… 
The price of Oil remained trading in the $84 handle all day yesterday… And the 10-year’s yield gained 1 bp… to yield at 4.01%… So, Wednesday for the currencies, Oil and bonds, was a borrrrrrriiiiinnnnggg day, while the metals continued to get sold. 
In the overnight markets last night…  The dollar got sold… This time it was more of a widespread selling of the dollar, with the BBDXY losing 3 index points. The euro has climbed back above 1.10, and the Petrol Currencies all have seen some gains, with the price of Oil moving higher. The Petrol Currencies include: the ruble, krone, real, peso, loonie, and others…  Did the overnight markes get a flyer on the Stupid CPI? Because it sure seems as though they did… Oh well, it is what it is… 
As I just said, the price of Oil has been moving higher, although last night it lost 50-cents… no biggie… And trades this morning with an $83 handle… Gold is up $7 in the early trading today, so maybe there is something to this flyer being released on the Stupid CPI… 
Bill Bonner had me in stiches yesterday, and I have a snippet of his letter that can be found at Bonner Private Research | Substack… here’s Bill: “This is ‘fiscal inflation.’ It helps delay a correction…for a while. But it gives us a Banana Republic deficit at 8% of GDP…national debt accumulating at $5 billion per day…rising bond yields…and an upcoming headache that is going to be one for the record books. All of this debt will eventually have to be rolled over at higher rates…and inflated away.” 
And to the question that was asked of why doesn’t Biden get credit for the economy? Bill said, “Why doesn’t he get credit? Why not give Harry Truman credit for the urban renewal program in Nagasaki after 1945? Why not give Chief Sitting Bull credit for reducing payroll costs in the 7th Cavalry?”
Chuck again…  All this debt, with plenty more to come, just keeps piling up, and will have to financed… And to finance our debt, we as a country, issue Treasury Bonds & Bills… Those bonds/ bills have a yield, or interest rate that HAS to be paid to the buyer of the bond… What have interest rates been doing for the last 1+ years? Going up at a very fast rate, right? So, new bonds being issued have the current higher rates that will have to be paid, and bonds that come due, will have to rolled over at a higher rate… You see where this all headed, right? And to me, that’s why the POTUS doesn’t get credit, for his $1.5 Trillion deficits each year, will only make matters worse for the U.S. And that’s all I have to say about that!
So, the question is… When will the Fed Heads realize that their war with inflation, is going to cause a war in this country? Civil Unrest, etc. …   When the free handouts that the Gov’t is so good at handing out, get cut, because the cost of servicing the bonds (paying interest) will take up most of the tax receipts, leaving nothing to pay for the free handouts… Uh-Oh!   
OK, let’s talk about something else Chuck, your jaded side is really showing this morning… 
Well, like it or don’t… The markets will be highly anticipating the print of the Stupid CPI this morning… These guys and gals in the markets all believe that the Stupid CPI holds the key to whether the Fed Heads continue to hike rates, or pivot and cut rates… I say balderdash! The Fed Heads barely give a nod to the Stupid CPI, instead using the PCE (Personal Consumption Expenditures) as their preferred inflation rate calculator… But the markets, being the markets, will make a tempest in a teapot, regarding what the Stupid CPI was, so be prepared… 
Head Fed Head, Jerome Powell, told us all in clear English language a few months ago, that the Fed Heads had two more rate hikes to go, and they’ve used one of those so far… So, either he has to come clean with his tail between bis legs and admit he was wrong, or… he goes ahead and hikes again… What do you think he’ll do? 
So, this is off the beaten path for this letter, I just can’t let this go, without commenting about it… Did you hear about the shop owner in N. California that took policing into his own hands, and subdued a potential heist from a man carrying a gun?  Here zerohedge.com on their take: “Just when it appeared that a law-abiding business owner had scored a victory against a scumbag shoplifter for once by subduing him with an almighty thrashing, the police have stepped in to criminally investigate the shopkeeper for assault.”  
So, this whole wide world is going to pieces, and this myfriends, is one of the reasons why… 
The U.S. Data Cupboard today has the aforementioned Stupid CPI… Along with the usual on a Tub Thumpin’ Thursday, the Weekly Initial Jobless Claims… I don’t know when all these announced layoffs are going to begin to show up here, or maybe they won’t, given the gov’t’s propensity to cook the books in their favor… 
To recap… Yesterday held no moves for currencies, Oil and bonds, but Gold & Silver got sold, once again… Chuck goes through the pain that will come from rising interest rates on bond servicing… Got Gold?   And in the overnight markets last night… The dollar got sold to the tune of 3 BBDXY index points, with the euro climbing back over 1.10… Gold is up $7 in the early trading today, something smells like yesterday’s fish to Chuck… 
For What It’s Worth… ok… This article is about the new mBridge system that is being built to allow instant trade notification and payment… Sort of like SWIFT, but… without the U.S.’s intervention… This snippet is long, but… worthy… here we go! 
Or, here’s your snippet: “In 2009, after the Global Financial Crisis, PBOC Governor Zhou Xiaochuan said, “The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies.” He proposed Special Drawing Rights, SDRs, digital reserve currency valued against a basket of commodities and currencies. The SDRs have been trialed internationally since 2019 but a means of moving it around securely, quickly, and cheaply was lacking until..

Enter mBridge
Cross-border payments, which the US dollar dominates, will reach $250 trillion by 2027, up $100 trillion in a decade. There’s just no stopping it.
The trouble is that international payments are slow and costly, and Washington’s ‘long-arm’ jurisdiction over all dollar transactions has politicized trade.
So Basle’s Bank for International Settlements came up with mBridge.
mBridge, the BIS’ digital interbank payment system, lets Chinese companies pay UAE vendors in digital e-yuan. The mBridge blockchain instantly converts the yuan payment into dirham and and credits it to the vendor’s UAE bank account. mBridge 6-8 ms. execution time and 2.2¢ transaction cost bring Beijing’s goal of frictionless trade a giant step closer.
And best of all? No US regulators, banks, or dollars are involved.
Cause for concern
The PBOC (the world’s richest central bank), the HK Monetary Authority, Bank of Thailand and the UAE Central Bank have been using mBridge with traders in China, Hong Kong, Thailand and the UAE for over a year.
Now BIS says it will release mBridge globally by Xmas.

US Treasury officials worry that mBridge will help Beijing revolutionize wholesale cross-border digital payments, and that this is what will happen with all of China’s 143 trading partners:…”

Chuck again… The main thing here is that the mBridge system will facilitate SDR’s (remember Special Drawing Rights) who have been rumored to take over the reserve currency from the dollar, because it’s NOT an individual country’s currency…  
Market Prices 8/10/2023: American Style: A$.6575, kiwi .6082, C$ .7466, euro 1.1021, sterling 1.2769, Swiss $1.1456, European Style: rand 18.7682, krone 10.1361, SEK 10.6045, forint 349.60, zloty 4.0421, koruna 21.9813, RUB 97.14, yen 143.74, sing 1.3450, HKD 7.8162, INR 82.71, China 7.2088, peso 17.00, BRL 4.8829, BBDXY 1,227.22, Dollar Index 102.14, OIl $83.87, 10-year 3.97%, Silver $22.83, Platinum $902.00, Palladium $1,304.00, Copper $3.80, and Gold… $1,921.60
That’s it for today… A nice win last night by my beloved Cardinals down in Tampa Bay… It’s amazing what happens when you get batters hitting the ball, and defenders catching the ball, and pitchers throwing stikes!   Of course that’s been the recipe for winning ball teams for over 100 years, but sometimes I think the Cardinals forget about it… My wrist is still hurting like the dickens, I guess I’ll have to go and have it x-rayed… UGH!  Next Wednesday, there will be no Pfennig, as I’ll be at the hospital for scans early in the a.m.  I did get a little more sound sleep last night, thank goodness… With the house in ruins right now from the water damage, I came to the conclusion yesterday, that I’ll have to cancel the Annual Butler Family Labor Day BBQ and Pool Party… UGH!  Paul Young takes to the finish line today with his redo of the Hall & Oates song: Every Time You Go Away…  So… that’s it for this week, I’ll be glad to not wake up early the next 3 days… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and will continue to Be Good To Yourself!
Chuck Butler