- FOMC leaves rates unchanged and makes the dollar bugs happy!
- The Bank of England cuts rates…
Good Day… And a Tub Thumpin’ Thursday to one and all! I was feeling stronger yesterday, with my stomach problem all subsided, I decided I would go outside and take a walk.. But then I realized it was raining! UGH! You know what they say about the best laid plans of mine and men… Well, today is the last Pfennig until next Wednesday, so soak it in, and keep it safe in case you want to read it again! The Neon Trees greet me this morning with their song: Everybody Talks…
Well, the FOMC didn’t surprise anyone, as they left rates unchanged yesterday. Fed/ Cabal/ Cartel chairman, Jerome Powell, told the audience after the rate decision, that the question about the effects of the tariffs leading to higher inflation or even stagflation, were prevalent and was the main reason for keeping rates unchanged… To me, his outlook for the U.S. economy wasn’t all seashells and Balloons, but the dollar bugs sure took it that way, and began buying dollars… And buy them by the bunches! The BBDXY gained 4 index points after the rate announcement… And finished the day at 1,2222…
Gold saw a bit of profit taking after two consecutive days of + $90 gains… But the majority of the selling came from the short paper traders, and they took Gold down by $60 to close at $3,364… Silver didn’t fare any better or escape the short paper trading and it lost 76-cents to ciose at $32.41… I would have bet the farm that the short paper traders would enter the market after the FOMC left rates unchanged…. They would point to rates remining high (for this go-round that is) and the dollar bugs dancing in the street, for their reason to sell short…
The price of Oil remained trading with a $59 handle… I have to do my mea culpa here… Yesterday, in the currency roundup, my fat fingers skipped over the “5” and I reported an Oil price of $9… Thanks to my youngest sister who pointed that out to me… UGH! The 10-year Treasury bond saw some buying, as the bond boys saw the Powell words like I did and the yield on the bond fell to 4.30%…
In the overnight markets last night… The Bank of England (BOE) cut their internal rate 25 Basis Points this morning… This was the first time since last August that the BOE had reduced interest rates. The decision was influenced by concerns about the impact of potential US tariffs on UK exports and a generally weak economic outlook. But the debasing of the pound sterling didn’t hurt the currency much, and so we move along to other things this morning…
The dollar got bought yesterday, and that buying continued into the overnight markets with the BBDXY gaining 2 more index points, thus giving the BBDXY a total of 6 index points added since yesterday morning… Shoot Rudy, even the old Dollar Index rallied back to 100… The euro fell below .1.13, again… And the rest of the currencies have lost their perked-up values overnight… Now, if I were king, I would have decreed that the dollar get sold, because of what Powell said about tariffs and Stagflation raising prices in the future… Looking ahead this is what the economy will face and with Consumers scratching and clawing to make ends met these days, higher prices is not what they need…
Speaking of tariffs, I read yesterday that they are beginning to bite… OH Boy~ i also read that the U.S. and China will begin negotiations in Switzerland this weekend… Hmmm… Away from all the naysayers and fist pumpers… Something struck a chord with me here… Remember when I wrote in the Pfennig about how the Chinese set their parameters on the possibility of negotiations? And then I read that the POTUS announced that he would lead the negotiations… I don’t think the Chinese will enjoy that part very much… This meeting is not su much about tariffs but rather de-escalation… I’m sure the tariffs will be discussed though, so check your news station at least once on Sunday to see if anything, even a crumb of news is reported here…
I won’t be writing on Monday to tell you what transpired… So, that is your homework assignment! HA!
On a sidebar here, I came across this info that got my mind racing with ideas of how to present it… So, here goes: Weightwatchers is going on a diet! Wait, What? Yes, Weightwatchers are no different from the masses of companies that have taken too much debt… Here’s the skinny: ” WeightWatchers files for Chapter 11 bankruptcy to shed roughly $1B in debt from its balance sheet, expects to emerge from bankruptcy process in 45 days and remain a publicly traded company.”
You see, taking on too much debt is a bad thing, and the ZIRP (zero interest rate policy) that held fort here in the U.S. for a long, long time, tempted companies to take on more debt than they knew they shouldn’t have, but they did, because, well it was “so cheap”… And even WeightWatchers can fall into this debt trap…
The U.S. Data Cupboard today has the usual fare for a Tub Thumpin’ Thursday, the Weekly Initial Jobless Claims and it already printed… (I must be late, late for an important date!) and the jobless claims for last week were 228,000… Still high in my opinion.. We also saw the 1st QTR Productivity, and it was a negative 0.8%… I’ve told you previously that this data is useless to me, in that it just records how hard everyone is working… So, judging from the outcome, in the 1st QTR we, as a country, didn’t work very much… I’m just saying…
To recap… The dollar began getting bought yesterday, after the rate announcement by the FOMC. They left rates unchanged and made some dreadful comments about the future for the economy, but the markets didn’t listen to that, and just rejoiced having rates remain high (for this period, that is) The Bank of England cut rates for the first time since last August… WeightWatchers are going on a Diet! And Chuck explains what ZIRP did to companies’ balance sheets…
For What It’s Worth… I spent a lot of time talking about the Trade Deficit yesterday, and then this article came across my laptop and I thought that it did a good job of explaining what’s going on and it can be found here: Tariff-Frontrunning Sparks Record Trade Deficit In March | ZeroHedge
Or, here’s your snippet: “The U.S. trade deficit widened to a record in March as companies rushed to import products as the Trump administration readied sweeping tariffs.
The goods and services trade gap grew 14% from the prior month to $140.5 billion (notably higher than the median estimate of a $137.2 billion deficit).
The value of imports jumped 4.4% to a record $419 billion, while exports edged up just 0.2% as firms scrambled to get ahead of President Trump’s ‘Liberation Day’ tariffs…
As a reminder, the figures aren’t adjusted for inflation.
Both Goods and Services deficits increased. Imports of consumer goods climbed by the most on record, while inbound shipments of capital equipment and motor vehicles also increased.
Oil & Gas exports topped import by a record in March while imports of Chemicals relative to exports exploded to a record high…
Imports from transshipment hubs surged, likely as some imports from China were diverted to third countries. Imports from Vietnam and Thailand rose well above the 75th percentile of their year-to-date pace.”
Chuck again… Well, this is just robbing from the future, in my opinion, but if a were a company I would seriously think about doing the same…
Market Prices 5/8/2025: American Style: A$ .6418, kiwi .5928, C$. 7199, euro 1.1283, sterling 1.3316, Swiss $1.2108, European Style: rand 18.1767, krone 10.3534, SEK 9.6646, forint 358.21, zloty 3.7835, koruna 22.0947, RUB 82.62, yen 144.67, sing 1.2965, HKD 7.7711, INR 85.71, China 7.2380, peso 19.59, BRL 5. 7449, BBDXY 1,2225, Dollar Index 100.05, Oil $59.67, 10-year 4.30%, Silver $32.34, Platinum $971.00, Palladium $960.00, Copper $4.60, and Gold… $3,342.41
That’s it for today, until Wednesday next week… My beloved Cardinals made it a 5-game win streak with their sweep of the Pirates yesterday. They got the game in before the rain… Now they head to D.C to paly the Nationals… Well, this Sunday is Mother’s Day… If you’re lucky to still have your mother around, make sure you give her a hug and tell her how important she is to you! I miss my mom greatly, especially this time of year… She was my biggest fan… And I’ve had that void in my life since 1997… So, don’t blow it! Sunday is Mother’s Day! Blood, Sweat & Tears take us to the finish line today with their great 60’s song: You’ve Made Me So Very Happy… I hope you have a Tub Thumpin’ Thursday to day, and all you moms out there, I hope your Sunday is grand! Please Be Good To Yourself!
Chuck Butler