August 14, 2023
* currencies & metals get sold in the overnight markets
* Chuck unloads on the short paper trading scheme…
Good Day… And a Marvelous Monday to you! A very rough weekend for me, as i battled with my stomach all weekend… I tried to get a life and go to my local watering hole on Friday, but only lasted about an hour, before the circus, rumbling and eruptions in my stomach had me heading back home… UGH! I know that other cancer patients have a worse time with their chemo, so I won’t carry on like it’s the end of the world for me here, just pointing out, my difficulties dealing with my chemo… My beloved Cardinals took 2 of 3 from the Tampa Bay Rays late last week, and then did their normal “play to the level of their competition” and got beat by the lowly K.C. Royals… Memo to Adam Wainright… “hang ’em up Adam”… it’s time… Crosby, Stills & Nash greet me this morning with thier mega hit song; Suite: Judy Blue Eyes…
Well, when I left you last Thursday, we were waiting on the Stupid CPI to print… I had made a point about how it appeared the markets had gotten a flyer on the print, because they were trading as if they knew what it was going to reveal… So, with no further ado, The Stupid CPI printed a +.2% gain for July, and YTD at 3.2%… So, here’s what I was talking about… The annualized inflation was 3.2%, and 3.3% was expected, so… the markets with all their geniuses, decided that inflation has softened, and they might lead the Fed Heads to not hike rates again… These guys are just looking for excuses to run up stocks…
I, of hardly ever Tweeting, Tweeted that I had made mention of the idea that a flyer was received by the markets, and then when the stupid CPI printed it made it clear to me that they had received one! Now, don’t go getting all giddy about me tweeting, it’s the first one I’ve tweeted in a month of Sundays…
So… On Thursday last week the dollar was soft… because of the stupid CPI… Bonds got bought, because they thought that they were at yields that might not be seen again on the high side that is… Gold was a non-event on the day, and the price of Oil remained Steady Eddie in the $83 handle.
On Friday, the markets got a shock when PPI (wholesale inflation) rose .3% in July… That put the thoughts of no more rate hikes on the back burner, because PPI feeds CPI, and therefore inflation isn’t dropping any time soon… And that means the Fed Heads’ promise of two more rate hikes, with one down, still have one to go… And that got the dollar bought on Friday, Gold again was a non-event (gained $1.30), bonds are confused, and the price of Oil remained trading with an $83 handle.
So, what was thought on Thursday, was quickly dispelled on Friday… Stupid markets follow the stupid CPI, so they get what they deserve! One other thought on the data front from Thursday… The Weekly Initial Jobless Claims rose to 248,000 the previous week, from 227,000 the previous week to last week… I had mentioned the other day that I didn’t know when all the layoffs that have been announced by Corps were going to begin showing up in this data, and voila! There it is! More to come, I would suspect…
In the overnight markets last night… Well, the dollar buying went on a buying spree, with the euro losing almost a full cent, and the BBDXY gaining over 3 index points… Gold is down $4 in the early trading today, and Silver is flat as a pancake (Head East)… The Petrol Currencies can’t even find some love from the price of Oil, as it has slipped by $2 in the overnight trading… and trades this morning with an $81 handle… And Bonds… Well, the Tsunami of bond issuance is still going on, and with it bond yields are getting marked higher to attract buyers… The 10-year’s yield is 4.18% This morning…
We’re starting the week on a real sour note for the non-dollar assets, and the anti-dollar assets… I sure hope the rest of the week doesn’t play out like the first part of Monday has!
I’m going to go up on my soap box now and rant about something… if you’re in no mood for one of my rants, then just skip ahead… OK.. everyone that wants to be here is here, right? Last chance saloon, to skip ahead… All right, I’m just fed up to my ears with all these manipulated markets… Price discovery?, true Bids and Offers? Those are things that no longer exist in the markets… Central Banks are to blame for a lot of this with all their QE, bond buying, and manipulating yields downward… The Regulators are to blame for a lot of this will their looking the other way, while short paper traders just keep shorting assets over and over again… And the Congress, not paying attention to the ball, is the other culprit here… Well, then why would they? If stocks are heading higher, and they’re all-in on stocks, why would they question how that happened? And the sort paper traders? Those greedy bas%(^&#s… I had better move on or else my blood pressure will be shooting for the moon!
Well, the markets barely flinched when Fitch announced their credit rating downgrade for U.S. debt… But the main idea here as Fitch said in their communique that the structure damage to the U.S. has been very bad… But when will that begin to show in how the dollar is traded? That’s the $ 64 quesion folks… It’s coming… you can feel it coming like you can feel the rain is coming in your bad knee… Patience… That’s all I can say about that…
The Russian ruble is going through hell and won’t be coming back for some time, as the ruble fell to 100 VS the dollar… The Russian Finance Minister said that a period of loose monetary policy has been the problem with the rubles performance… Now, those are fightin’ words pal… Because Evira Nabiullina is the Central Bank Gov. and a Central Bank Gov. that I have a lot of respect for… I think her hands are tied, because the country is at war, and it’s not loose monetary policy, bud!
And the New Zealand dollar/ kiwi, fell below 60 in the overnight trading last night… I don’t get it, why beat on kiwi, when they have the highest interest rate of the industrialized world? Their Central Bank is top notch, and whatever the reason the traders have taken a chunck of flesh from kiwi, it’s wrong… I’m just saying…
The U.S. Data Cupboard last week was a doozy, with all the stupid prints and market reaction to them… This week we’ll see Retail Sales, and Industrial Production… But first we start today with nothing on the docket for today, and then nothing again on Friday this week… The data schedule maker probably doubles as the baseball scheduler… I’m just saying…
To recap… The dog days of summer are upon us, and that means the markets are tired and lazy… No impetus to go long one way or the other… Just short paper traders dominating and all the sheeple following their leads…. I shake my head in disbelief that this is all happening, to what was once clean, bid/ ask price discovery markets… Now it’s just dominated by paper traders… The dollar got bought late last week, and the currencies are looking for some safety somewhere, that isn’t being found… Same for Gold… And Silver… And Bonds…
Or, here’s your snippet: “
U.S. Money Market funds saw a fourth straight week of inflows ($14 billion this past week) to a new record high of $5.53 trillion…
Retail money-market funds saw inflows for the 16th straight week (and institutional funds also saw a 3rd straight week of inflows)…
The decoupling between money-market fund inflows and bank deposits continues…
Usage of The Fed’s emergency bank bailout facility rose by $1.2BN to a new record high at $107BN…
Finally, U.S. equity markets continue to diverge significantly from bank reserves at The Fed…
We leave you with one thought – in 7 months and counting, America’s ‘smaller’ banks will need to find that $100-billion plus from somewhere as that is when the BTFP bailout program ends (theoretically). Will regional bank balance sheets be stabilized by then…or will the current bloodbath in bonds be the catalyst for another round of pain?”
Chuck again… These are the things that happen when Banks don’t run their balance sheets correctly and look for pennies in profits… And they don’t service their clients the way a bank should… I’m just saying…
Market Prices 8/14/ 2023: American Style: A$.6487, kiwi .5962, C$ .7430, euro 1.0903, sterling 1.2645, Swiss $1.1350, European Style; rand 19.0650, krone 10.5012, SEK 10.8698, forint 351.40, zloty 4.0738, koruna 22.0750, RUB 102.12, yen 145.30, sing 1.3560, HKD 7.8187, INR 82.94, China 7.2527, peso 17.05, BRL 4.9311, BBDXY 1,237.96, Dollar Index 103.24, Oil $81.90, 10-year 4.18%, Silver $22.76, Platinum $909.00, Palladium $1,313.00, Copper $3.73, and Gold… $1,910.80
That’s it for today… Well, someone at the scheduling office for baseball should be fired… The Cardinals had an “off day” on a Sunday! That’s blasphemous! Sundays are for BBQ’ing, swimming, family time, friends visit, and baseball! UGH! The dog days of summer are upon us… When I was a young man, I always thought that these days would never end, long hot summer days… And when I was a teenager and building in-ground swimming pools in Oklahoma, I thought those hot summer days would never end… And now that I’m an old man, I wish they would last longer! Because summer gives way to fall, and chillier weather, and then the cold weather comes, and I’ve long said that I gotta go where it’s warm! Van, the man, Morrison take us to the finish line today with his mega hit song: Moondance… I was always a fan of Van Morrison’s music… I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!
Chuck Butler