The Dollar Gets Sold By The Bushelful

August 11, 2022

* Currencies turn the table on the dollar… 

* The Inflation Reduction Act will not live up to its title… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Another beautiful day, weather wise, here in my little river town yesterday, I spend a good part of the day outside! Little Evie was here last night, and her and I went for a short stroll down the street… I was telling her how a man is supposed to walk on the outside of the street so that the horses can’t nip at the ladies walking on the inside. She laughed at me and told me I was silly… I laughed at me too, and told her she was right! My beloved Cardinals got back to winning last night beating the Rockies. It was good to see them come out of the gate in the 1st inning and score 5 runs, just to let the Rockies know that there would be no more spankings! Robert Plant greets me this morning with his song: In The Mood…

And that song puts me in the mood to talk about how 2 of the 3 JPMorgan metals traders that were being tried for price manipulation, were found guilty yesterday, and sentencing won’t take place for a year, but the ruling calls for years in prison, but you and I both know that won’t happen… The finding of these two guilty adds to the previous problems at JP Morgan… So, I have to ask this question… “How does Jamie Dimon still have a job?”

OK, I got that off my chest… The dollar got sold further as the day went along yesterday… The BBDXY lost 10 index points, and ended the day at 1,259. The euro climbed to within spittin’ distance of 1.03, and the pound sterling, who had trouble gaining after the BOE announced a rate hike last week, finally got up off the mat, and moved higher. Gold lost $1.50 on the day, while Silver gained 9-cents. Gold finished the day at $1,793.90, and Silver at $20.69… It was an “up day” for the price of Oil yesterday, and black Gold, Texas Tea, gained $3 to end the day with a $91 handle.

I haven’t seen a day where the dollar gets sold like it did yesterday, in a moth of Sundays… So, here’s the skinny on what caused the dollar to get sold, stocks to rally, and Gold barely move at all… The stupid CPI printed yesterday, and the markets and spin doctors did exactly what I said they would do… They would trumpet the print of inflation at 8.5%, down from June’s 9.1%, and think that the Fed’s previous rate hikes have brought inflation down, and that they won’t need to hike rates so aggressively any longer…

And that’s exactly what happened yesterday… But remember what I told you yesterday, about what happened in the 70’s… that in the midst of rising inflation, we had a month or two of slowing inflation, and then all hell broke loose with inflation once again… I’m thinking that this is very eerily familiar with that time, eh?

But you know what? The only real reduction in prices last month came from the Oil prices, which were down almost 8% for the month… But… before you go out an party, Food was up 1.1% — eggs alone were up 4.3% — and shelter’s up 0.5%. Also up for the month: medical care, motor vehicle insurance, household furnishings and operations, new vehicles and recreation.

It’s really a misleading report folks… I wouldn’t be jumping back into the stock market with both feet, based on a hedonically adjusted inflation report from the Gov’t… George Carlin the famous comedian said it best when he said, “I have a rule and it’s I never believe anything the Gov’t tells me”… Pretty good rule if you ask me, given their track record in just the last 3 years!

In the overnight markets last night… The dollar got sold further down the river, and the BBDXY lost 2 more index points, the euro did move past 1.03, and the Aussie dollar (A$) is trading above 71-cents this morning. The Currencies look healthier than they have been for some time this morning, after the dollar selling yesterday and in the overnight markets.  

Shoot Rudy, even the Chinese renminbi gained overnight, and the yen got off the mat before the count reached 10!  And no sign of the PPT? I’m sure they’ll show up sometime before the week is out… 

Gold & Silver have not seen any love from the dollar selling though, as Gold starts the day down $3 and Silver starts the day down 15-cents… but the day is young, and with all this dollar selling the metals should turn around at some time.  I say “should” but in reality, there’s no given in the markets any longer based on fundamentals, and historic trading patterns. 

The price of Oil is up a buck this morning and is trading with a $92 handle, while bonds got bought yesterday… Hmmm… if everyone in the markets is now convinced that the Fed is going to pivot in September when they next meet, then why would you buy a bond at today’s yield?  I’m just asking the question, because it seems to be strange to me… 

Publishing and author guru, Bill Bonner says that the U.S. just looked at strike three come right down the middle… Let’s go to his daily letter to get what he’s talking about..  “And so… the strike-out is complete…
Strike one: real wages are going down…
Strike two: real GDP is going down (US in recession)…
Strike three: Real productivity is going down….
And you’re out! 

How do you like that? Mighty Casey, the USA, has struck out.” – Bill Bonner in his Bonner Private Research letter… 

Well, no one that I read, believes the Inflation Reduction Act, is going to do anything to reduce inflation, but what the heck, the leaders of this country tried, right? You can’t blame them if they have a box of rocks for brains We elected them! It’s our fault that the country is heading down the path of destruction… OK, I’m getting carried away here, it’s not our fault, unless you want to point the blame finger at the fact that we didn’t ride our elected leaders hard and put them away wet, and let them know that they wouldn’t be getting reelected if they kept allowing money to be spent that we didn’t have!

I get a new Agora newsletter that just showed up in my email box, titled: Agora Uncensored… Here’s the opening thought in the letter yesterday: “Only in America can our leaders call an inflationary bill that spends $430 billion of taxpayer money an “Inflation Reduction Act.”

Only in America can we have two straight quarters of negative economic growth, and leaders deny we’re in a technical recession. (We own a Dictionary, Mr. Powell.)

And… only in America can the stock market have a rip-your-face off rally because “inflation” was only 8.5% in July.

But here we are.

Gasoline prices fell more than expected last month (they’re still VERY expensive. The primary reason they fell is that demand is LOWER than it was during the Summer of COVID).

Home prices are unaffordable, but good news.

They were less “less affordable” than expected in July.

And good luck at the grocery store because my Cheerios are now the size of a tissue box.”

Chuck again… Yes I too feel the same way, everything is so confusing and backwards, and caddy Wampus! It’s so difficult to look at any news, or data print and know for sure which way the markets will trade based on the news or data.

I’m still on stock market collapse watch… I just wanted to let all those boys crying wolf know, that the wolf hasn’t shown up yet…

A handful of Fed Heads will speak today, following the lead by a couple yesterday who reiterated that more rate hikes will be needed… At least they are saying the right things, let’s see if the Fed Heads today do the same… 

The U.S. Data Cupboard yesterday had the stupid CPI that we talked about above. And today’s Data Cupboard will have July’s print of PPI (wholesale inflation), which should follow the stupid CPI’s lead and not be as strong as it was in June (+1.1%), but still be up and thus keeping the pressure on consumer prices…  We’ll also see the usual Tub Thumpin’ Thursday fare today when last week’s Initial Jobless Claims print… Recall that two weeks ago the claims surged to 260,000 and I truly believe that this surge will contunue… 

To recap… the dollar is getting sold down the river, and the PPT is nowhere to be seen… The euro has climbed above the 1.03 figure, and the Aussie dollar is above 71-cents this morning! Gold & Silver haven’t been allowed to participate in the dollar selling, but Chuck thinks that they will at some time, but then only the Shadow Knows…   The Inflation Reduction Act is not going to reduce inflation, or do anything to help the middle class…  What else did you expect from our elected leaders who have a box of rocks for brains? 

For What It’s Worth… Ok, I saw this article on Reuters and said to myself, “this is the kind of article that the FWIW section was made of”… This is an article about NYC charging a fee for causing congestion… Really! and the article can be found here: New York City drivers could face up to $23 a day congestion charge | Reuters

Or, here’s your snippet: “New York City could introduce a traffic congestion charge of up to $23 a day late next year, which a study released on Wednesday projected would reduce the number of cars entering Manhattan by 15% to 20%.

The city wants to charge a daily variable toll for vehicles entering or remaining within the central business district, defined as between 60th Street in midtown Manhattan and Battery Park on Manhattan’s southern tip.

New York, which has the most congested U.S. traffic, would become the first major U.S. city to follow London, which began a similar charge in 2003.

New York lawmakers approved the plan in 2019, and it was originally projected to start in 2021. But the federal government under President Donald Trump did not take any action.

The Federal Highway Administration (FHWA), which must approve the move, said on Wednesday it approved the required environmental assessment. The agency will review public comments submitted by Sept. 9.

It did not give a timeline for its decision, but the Metropolitan Transportation Authority (MTA) said the fee could come into effect up to 10 months after approval is granted. That period would be for system design and implementation.

“Congestion pricing is good for the environment, good for public transit and good for New York and the region,” MTA CEO Janno Lieber said.

Passenger vehicle drivers could pay $9 to $23 to enter at peak times, while overnight tolls could be as little as $5. Drivers could apply existing bridge and tunnel tolls to congestion charges.”

Chuck again… What kind of charge/ fee will they think of next?  I find this kind of nickel and diming people to be stupid thinking… 

Market Prices 8/11/2022: American Style: A$ .7101,  kiwi .6421,  C$ .7829, euro 1.0334, sterling 1.2205, Swiss $1.0625, European Style: rand 16.1618, krone 9.4992, SEK 10.0261,  forint 381.91, zloty 4.5333,  koruna 23.5850, RUB 60.98, yen 132.54, sing 1.3695, HKD 7.8460, INR 79.63, China 6.7394, peso 20.02, BRL 5.0924,  BBDXY 1,259.15, Dollar Index 104.93, Oil $92.88, 10-year 2.77%, Silver $20.54, Platinum $960.00, Palladium $2,262.00, Copper $3.64, and Gold… $1,791.42

That’s it for today…  After all the very hot days we’ve had here in the Midwest, this new run of not-so-hot days is great! I can go outside and not wilt! Cards and Rockies in a day game today… I love day baseball! I also like watching the Little League World Series games… The teams consist of 12-year old kids that are a true reflection of life… One kid might be 5-6 and weigh 200 lbs, and another kid might be 5 feet tall and weigh 100 lbs dripping wet… Well, not that I’m bragging about this, but I have now read all of the Stone Barrington novels, with only the 2 newest ones to be read, when they become paperbacks… that 62 books folks…  Before this, I read all of the Harry Bosch books, the Atlee Pine books, and others… Maybe I should be finding a new hobby?  The great King of Soul, James Brown takes us to the finish line today with his song: Papa’s Got a Brand New Bag…  I hope you have a Tub Thumpin’ Thursday today, and will have a wonderful weekend ahead, and please remember to Be Good To Yourself!

Chuck Butler