June 27, 2023
* currencies & metals rally on Monday & overnight
* Indian rupee steps up as a Carry Trade alternative…
Good Day… And a Tom Terrific Tuesday to you! Congrats to LSU for their NCAA baseball Championship, winning the rubber game of 3 last night in convincing style too! My beloved Cardinals returned from London yesterday, and I’m sure they are dealing with Jet lag today, but the game goes on, and jet lag or no, they will play the Astros tonight… I had a low blood sugar event yesterday, while at the grocery store, I rushed through the store to get home to eat something… Man those things are strange, the way my body reacts to them… After eating something I felt fit as a fiddle once again… Oh, Come on Chuck, you haven’t felt fit as a fiddle in 16 years, Ok, I retract that and say an old out of tune fiddle! Leon Bridges greets me this morning with his song: The River…
Well… Yesterday held no more market surprises for us… The dollar started the day down nearly 2 index points in the BBDXY, and ended the day down 1.5 index points. There were no surprises in the metals, as Gold & Silver both had their early morning gains pared back by the short paper traders… They just can’t seem to let the control of the direction of the metals alone… But like I said, I wasn’t surprised by their shorting because they’ve been in daily for the last 10 trading days…
The reason they limited Gold & Silver’s gains yesterday was they were scared that the metals would get a lot of attention because of problems in Russia, with a near coup and revolt and all the other stuff that’s going on there… And Gold & Silver were on their way to good gains before they weren’t… I’m just saying…
Gold ended the day gaining just $2.60 to close at $1,923.80, and Silver gained 34-cents to close at $22.87… The price of Oil remained trading with a $69 handle throughout the day… The FWIW article today is about the demand for Oil, so you won’t want to have missed that! The 10-year’s up then down days, continued yesterday with the 10-year adding 5 Basis Point of yield during the day…
In the overnight markets yesterday… The dollar was sold last night, the BBDXY lost 3 index points, Gold is up $3 to start the day, and Silver is up 9-cents this morning… Well, it seems the overnight markets decided to take some frustration out on the Russian ruble, and rightly so, I guess given the situation in Russia, and the ruble is trading with an 85 handle this morning… The euro is climbing higher once again, and nears its level on Thursday last week, before the engineered prop up of the dollar appeared on Friday. Gold is up $3 in the early trading today, while Silver shimmies up 9-cents… i really am frustrated with the short paper traders, but the thing they keep doing is making the metals cheaper to buy opportunities, so… What are you waiting for?
The price of Oil has slipped another buck and trades with a $68 handle this morning… I have a article in the FWIW section today regarding Oil and the summer driving season, so don’t forget to stop by the FWIW section this morning to read that. And the 10-year didn’t act like a water bouy and bob back and forth yesterday, as it remained 3.73%…
Well, at one time this past weekend there were 20,000 troops marching toward Moscow, and then they turned aournd and headed back… Strange, eh? I thought a civil war was about to explode in Russia, and then it wasn’t… This guy leading the 20,000 troops, ( I won’t even pretend to try to spell his name) sure rose to power in steady steps, going from child thief and doing prison time to selling hot dogs from a stand to serving Putin, and World leaders at his restaurant… I like stories that go like that… Not sure what to think of his business now, only the Shadow Knows…
I mention that because one would think that news like that in your country would lead to a weaker currency, but not the Russian ruble, it remained trading with an 84 handle throughout all the gryrations of the near coup, civil war, etc. But like I just said in the overnight markets section, the overnight markets decided to take some of the rubles value, and it trades this morning with an 85 handle…
Yesterday, I talked about the return of the carry trade, and offered up a couple of alternatives to A$’s and kiwi, when I mentioned that India and Brazil both had higher interest rates then Japan, and would be good candidates for the long side of the Carry trade… Yesterday, Bloomberg.com ran an article about using rupees as the long side of the carry trade, beating out the Indonesian rupiah… here’s Bloomberg.com: “The Indian currency offers higher compensation for risk than the rupiah, with a carry-to-risk ratio of 2.8 compared with just 0.5 for Indonesia, according to data compiled by Bloomberg.
Chuck again… Sounds like a layup to me, comparing those two currencies to go long… Besides rupees are more widely distributed currency and is for the most part liquid… I can’t say that about the rupiah…
Remember not that long ago, when the debt escaltor talks were still going on, I told you that when the dust settled on the talks, there would be an onslaught of new bonds issued by the Treasury, because they had to replenish their coiffures that ran nearly dry, as they were used as the alternative measures by U.S. Secretary, Janet Yellen, to pay bills while the debt was being held at #31.4 Trillion… Well, Wolf Street was all over this thought yesterday, here’s a bit of that:”Markets are going to have to absorb a flood of Treasury bills (Treasury securities with maturities of one year or less) in the coming months, estimated at something close to $1 trillion, as the Treasury is trying to refill its depleted checking account, the Treasury General Account, while also covering higher outflows and lower tax receipts (we discussed this most recently here). This has been teased in a series of Treasury department announcements that keep getting worse.”
Chuck again, again… Yes, the new name that the current debt of $32 Trillion is being called is the “Debt Time- Bomb”… And all this debt just keeps growing larger and larger, and no one, in Washington DC seems to care… Commercial building loans are been walked away from, and the banks are left holding the bag, or the Commercial bldg, that no one wants to work in… And who do I blame for all this mess? The Fed/ Cabal/ Cartel… They should have had the cajones to just say no to the lawmakers that just kept adding to the debt… And then on top of not saying no, they kept interest rates near zero for 14 years… Allowing Companies, Banks, whomever, to borrow at ultra-low rates and hope that their business came back strong… Because if it didn’t, how would the Business, be able to roll the debt at today’s higher loan rate?
Blame it on the rain, no wait, blame it on the Fed Heads, you know the ones that employ thousands of economists out of Ivy League schools. And could find inflation with both hands… The Fed Heads that not one of them have ever spent a day in the working world, learning about how the economy works… Yes, those knuckleheads… that’s who!
Ok, Chuck, time to talk about somehting else before the men in black suits wearing sunglasses show up at the door with a cease and desist order for yours truly! Censorship, it’s real folks, and for now I fly under the radar, but I can’t believe that will be forever… I’m just saying…
Longtime reader, Bob, sent me this link to Ansliebullion.com for an article about how the writer feels that there are things that will propell Gold to $3,000… Here’s one thought: “Gold’s current price per ounce, roughly half of the S&P 500’s level in Q2 (when priced in USD), could transform into a significant advantage, especially if the U.S. economy contracts. History has taught us how booms often bust when excessive liquidity is withdrawn. These circumstances may set the stage for gold to rise above and stay past its US$3,000…
Chuck again, again, again… The article says that FOMO (fear of missing out) will drive the price of Gold higher, once the slowdown in the U.S. economy begins, and investors turn to Gold… I’ll just say, I’m from Missouri, I’ll have to be shown this will happen before I believe it, for there’s no way the short paper traders are going to allow a steady rise to $3,000 without some input from them…
The U.S. Data Cupboard didn’t have anything for us yesterday, but today the Cupboard will yield the May reading of Durable Goods, which in April were negative, and there’s been nothing to suggest that it will turn positive in May… We’ll also see the Case/ Shiller Home Price Index for April… March’s report continued to show the rot on the vine of home prices… and rates went higher in April, so I would think this rot continue on Home Prices’ vines…
To recap… The dollar didn’t move thoughout the U.S. session yesterday, and after it was sold by nearly 2 index points in the BBDXY in the overnight markets, the dollar was stuck in the mud the rest of the day. Gold & Silver saw gains, that were watered down by a lot, by the short paper traders… Russia’s near miss coup/ civil war had the markets on the edges of their seats, but it turned out to be a tempest in a teacup, for now that is… The Debt Time-Bomb is ticking, do you hear it? tick-tock, tick-tock…
For What It’s Worth… So, for some time now, I’ve talked about the “summer driving season”, and thinking that it would revive the demand for Oil… But this article from Bloomberg.com yesterday caught my attention, because it points out a different story for Oil, and it can be found here: Record July 4 Vacation Travel in the US Won’t Save Gasoline Market – Bloomberg
Or, here’s your snippet: “After three pandemic summers, a record number of Americans will hit the highway this July 4th weekend, but even that won’t return the country’s struggling gasoline sector to its pre-Covid peak.
More than 43 million motorists will drive 50 miles or more from their homes this Independence Day weekend, according to a forecast from AAA. That’s 4% more than in 2019 and would mark a new record. Several years of pent up demand and lower prices at the pump are largely to thank, with gasoline more than a dollar per gallon cheaper compared to last year.
Throw in travel by planes, buses, cruise ships and trains, and holiday travel will hit an all-time high of 50.7 million Americans during the five-day period from Friday, June 30 to Tuesday, July 4, the motor club predicts.
But while record driving is good news for gasoline and the refiners who supply it, the widespread adoption of more efficient vehicles means fuel demand nonetheless remains muted — and might never get back to pre-pandemic rates. Last year saw the biggest annual jump in efficiency for US cars in more than a decade, with the average car now getting 33.3 miles on a gallon of fuel, according to preliminary data from the Environmental Protection Agency. Although that’s a plus for the environment, it means fuel use — still almost 5% below the same time in 2019 — in all likelihood will never return to that level again.”
Chuck again… Tomorrow I’ll have a rebuttal of this article that was also on Bloomberg.com… So, don’t think for a minute I’m going to let this take over my thoughts about a “summer driving season”
Market Prices 6/27/2023: American Style: A$ .6695, kiwi .6180, C$ .7593, euro 1.0965, sterling 1.2736, Swiss $1.1196, European Style: rand 18.4666, krone 10.7269, SEK 10.7119, forint 336.29, zloty 4.0385, koruna 21.5240, RUB 85.23, yen 143.55, sing 1.3478, HKD 7.8331, INR 82.08, China 7.2106, peso 17.07, BRL 4.7538, BBDXY 1,227.11, Dollar Index 102.48, Oil $68.60, 10-year 3.73%, Silver $22.96, Platinum $929.00, Palladium $1,318.00, Copper $3.81, and Gold… $1,926.20
That’s it for today… the heat backed off for day yesterday, and it was a pleasant day with a nice breeze blowing all day… I was talking to my darling daughter, Dawn, last evening, and she was complaining about the heat, and I reminded her that it was summer, and summer is supposed to be hot! When will the stock jockeys realize that were on the verge of a blow out recession? I guess when it slaps them in the face, and then it will be too late, baby now, it’s too late (Carol King) The MLB Trade Deadline (8/1) should be quite exciting this year, with all the parity going on, and teams thinking if they just had one more piece they could win it all. I wonder if the Cardinals will do any trades? Knowing the Cardinals GM, he’ll probably trade away a fan favorite… The St. Louis Bank, Mama’s Pride, take us to the finish line today, with their great 1 hit wonder song: Blue Mist… I hope you have a Tom Terrific Tuesday today, and please remember To Be Good To Yourself!
Chuck Butler