- what’s going to slow down the dollar?
- There are no longer any markets just interventions
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, the Phillies evened up their series with the Braves… It comes down to 1 game to decide who moves on… The White Sox won 2 of 3 so they do move on… See? I didn’t jinx them! My friend, Dennis Miller felt like I skipped him and the Cubs over on Tuesday. I didn’t mean to, but now they lost the second game and they are going home… There’s not a lot of anything going on this morning, other than a dollar rampage… That’s why I’m kind of beating around the bush this morning… Marty Balin greets me this morning with some of his solo work: Hearts…(He also was the lead singer in the Jefferson Starship )
I used to play a lot of songs on the Touch Tone before our watering hole became so loud! And I used to play a lot of Marty Balin… he has a good voice, and his songs are top notch… It’s amazing that our little watering hole which is a dive, has become so popular…
Well, the dollar stalled out Tuesday night, as it had to catch its breath from all this running it has been doing, but made up for its pause to rally again yesterday… The dollar gained 2 index points in the BBDXY… I asked the question yesterday about Just What Are These Knuckleheads doing buying all these dollars? I didn’t get an answer, but then I didn’t expect any… I think we have a case of FOMO… Yes, the fear of missing out should the FOMC hike rates even more than just a 25 Basis point hike…
The thinking in the markets right now is that the FOMC will hike rates multiple times… The bond boys are on record with that thought, as they have marked/ sold the 10-year to 5.29% Somebody, I forget his name, and I didn’t write it down, said that “the 10-year’s yield will continue to go higher… So, don’t buy yet…
The price of Oil remained trading yesterday with a $90 handle… POTUS wants Diesel fuel that’s scheduled for shipment to remain here in the U.S. that would help the price to slow down… But where’s the free trade in that? I’m just asking the question… do you think the cost of diesel in euro is higher or lower than here in the U.S.?
Why do you think we as a country export diesel to Europe and other places? Because it cost more there, and we make the spread… There are 3.785 liters to a gallon.. So, doing the math, I get that they pay about $8 after converting euros to dollars… But we’re going to cut that off and keep diesel here in the U.S.
I wonder where the Europeans will get heating oil this winter? For it’s got to scarcer than it was last winter and last winter was moderate in weather….
In the overnight markets last night… The dogs of the dollar have been released! The BBDXY is up 5 index points, and there’s nothing to stop it… It’s a runaway bus! Everyone thinks that that the FOMC will hike rates multiple times going forward, and that thought has the dollar getting bought…
The currencies are getting trashed this morning, the euro has fallen below the 1.13 level… there are two currencies that are bucking the trend… The Chinese renminbi and the Brazilian real… This is crazy folks! The dollar is so overbought that it’s almost off the chart…
I think that the Chinese renminbi has a lot of room to move higher VS the dollar as the renminbi is poised to capture a significantly larger share of global trade and finance as more Chinese companies expand overseas and as China pushes to internationalize its currency… it won’t come overnight, folks… You’ll have to be patient…
The price of Oil has bumped higher and trades this morning with a $92 handle…
And the 10-year Treasury bond remained at 5.29% overnight… But, that’s a 24-year high for the bond, and it just means that borrowing costs have gotten very much higher, folks…. Don’t be trying to buy a house right now, or borrow for anything…
Well, I received a note yesterday from Reuters that said that Iranian rial was at an all-time low VS the dollar with it taking over 2.5 Million rial to equal a dollar… You would need a wheelbarrow to take your cash to the bank and deposit it…
And Gold is flat as a pancake (Head East) this morning, and Silver is down 51-cents to start the day… The fake PCE didn’t help things here much as everyone is leery of the BEA’s number…
I remember years ago, when at EverBank World Markets, we used to get people calling us telling us the Iraqi dinar was to get revalued and ask why we didn’t offer the currency… There was this guy at an Investment Seminar that asked me about dinar, and I told him that it was all a hoax… he didn’t like hearing that because he had put all of his father’s business that his father had left to him, Into dinar… ( I’ve always wondered how he explained this to his family) And now the Iraqis have dropped 3 zeros from the price quote of the dinar… I shake my head in disbelief….
OK, enough of that sob story…
The euro was hanging tough… yes, it was moved down to trade with a 1.13 handle, that was about 10 days ago… and has moved below the 1.13 handle overnight… UGH! The euro was down further in days past, at one time a guy from Lola (Goldman Sachs) was on TV saying that he believed the euro would fall to less than par… He was a naysayer for sure… I told the people of the trading desk at EverBank World Markets that I would take that bet, and the euro came storming back…. I wish sometimes I would put money where my mouth is… in other words… make a bet… But I’m not a betting man other than a shiny quarter…
The Japanese leaders were out spewing their lies yesterday, telling anyone that would listen that the “carry trade” is dead and not to go back to it…. They’ve taken to jawboning the yen instead of physical intervention to lift the yen… I still wouldn’t touch yen with your 10-foot pole….
Speaking of intervention… I’ve said this before a few times… that there are no markets any longer, just interventions… its tru, its tru I did see a putty tat!
And while we are in Asia, let’s talk about a country that I never mention… S. Korea… it was reported yesterday that S. Korea for the first time in 13 years will buy some physical Gold… That’s 13 years folks, where the heck have they been? Oh well, they are reported to be buying 1 ton of Physical Gold… add that to the total of Central Bank buying and Gold has a crutch…
The U.S. Data Cupboard had the ADP Employment Report for Sept, and it showed that 90,000 jobs were added in Sept… Personal Income and Personal Spending printed for Sept, and the report wasn’t good… PI came in at .2%, while PS came in at .9%… I would think that credit cards got a workout in Sept. And the PCE came in for Aug. at 3.4% yoy… That was down from July’s 3.7%, and that was because of lower Oil prices… So, don’t for one minute think that inflation is on the run and it won’t be long until the Fed Heads see inflation back within their target of 2%
And tomorrow is a Jobs Jamboree for Sept… you have to wonder what hedonic adjustments the BLS will add to the surveys this month? For since the negative print for Jobs Created the BLS has worked overtime to make certain that doesn’t happen again! Right now the Jobs created for Sept is forecast to be 200,000…
To recap after a night of drifting, the dollar got back to work yesterday gaining once again… Gold was up while Silver was down… And then Chuck relived some of life at EverBank World Markets… That ought to be interesting… NOT!
For What It’s Worth… Well, one of the reasons the dollar is so strong is that everyone and their brother thinks the FOMC will raise rates to fight inflation, multiple times going further… But what happens to those thoughts if inflation comes down a bit by itself? Well, the Fed’s preferred inflation calc. Did just that yesterday according to the propeller heads that put this report together… This is about the PCE coming down some miraculus way and can be found here: Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected
Or, here’s your snippet: “Consumer prices posted a smaller-than-expected increase in August from a year ago, according to the Federal Reserve’s primary inflation gauge, the Commerce Department reported Wednesday.
The personal consumption expenditures price index rose a seasonally adjusted 0.3% for the month, putting the 12-month gain at 3.4%. Economists surveyed by Dow Jones had been looking for increases of 0.3% and 3.7%, respectively.
Excluding food and energy, PCE posted a 0.2% climb that put the annual core level at 3%. The respective forecasts were for 0.3% and 3.3%.
Though the Fed officially follows the headline PCE number, officials generally consider core a better gauge of longer-term trends.
While the annual increases were less than expected, they came as the Bureau of Economic Analysis changed the way it computes several components of the index. The BEA adjusted methodology for how it measures prices for legal services, software and computer accessories and portfolio management.
The revisions lowered the core July PCE level by 0.36 percentage point.
Chuck Again… There you have it… The propeller heads changed the way they calculated PCE… It only takes time to figure out how to get inflation lower and the BEA has taken the first step in Managing Gov’t reports so that we all think that things are better than they are!
Market prices of 9/30/2026: American Style: A$ .6942, kiwi .5607, C$ .7017, euro 1.1283, sterling 1.3283, Swiss $1.1960, European Style: rand 16.5790, krone 9.6372, SEK 10.0487, forint 325.67, zloty 3.8764, koruna 21.6772, RUB 83.37, yen 158.16, sing 1.2804, HKD 7.8474, INR 96.30, China 6.7044, peso 18.19, BRL 5.1746, BBDXY 1,223, Dollar Index 101.85, Oil $92.28, 10-year 5.29%, Silver $ 61.03, Platinum $1,720.00, Palladium $1,211.00, Copper $6.65, and Gold… $4,178
That’s it for today and this week…Next week on Wednesday I doubt I’ll have time for a Pfennig, as I’ll be getting ready for a Lunch with my classmates… Then I have another batch of classmates that meet on Saturday… We had a large class! It’s Homecoming Week at Mizzou th school that held the first Homecoming many years ago… I used to go down on Friday, see the house decs the skits and then watch the parade on Saturday morning and finally the GAME! But since I don’t get around too well, those activities had to stop… Oh well… The Los Bravos take us to the finish line today with their great 60’s song: Black is Black… I hope you have a Tub Thumpin’ Thursday today, and Please Be Good To Yourself!
Chuck Butler