The Dollar Takes No Prisoners!

August 23, 2022

* Currencies & metals get sold on Monday

* Chuck steps out of his lane and makes a call… 

Good Day… And a Tom Terrific Tuesday to you! Has anyone else been following the resurgence of Albert Pujols? Just a week ago he was 11 home runs away from 700… At that time I didn’t believe he would get enough at bats to reach 700… But now a week later, he’s only 7 away! And the other teams the Cardinals are playing are doing the Cardinals and Pujols a big favor by pitching left handers! Oh, and Albert’s home run last night was the only run in a 1-0 win for the Cardinals over the Cubs…  And another wonderful day, weather-wise here in my little river town! The Kinks greet me this morning with their song: Sunny Afternoon…

Well, the dollar buying continued throughout the day yesterday, with the BBDXY gaining 5 index points. The dollar pushed the euro to a 2 decade low below parity. I found this on “The euro fell to a new two-decade low as a resurgent dollar and the prospect of a difficult winter for the region begin to bite. The drop is just the beginning of a deeper descent for the currency, according to strategists.

The common currency fell as much as 1.1% to 0.9928 Monday, below the prior two-decade low of 0.9952 reached in July — shifting away from a brief period of relief that propelled the euro to about $1.03 earlier this month. The currency was trading Monday at levels last seen in 2002, just a few years after the currency came into existence.” 

And needless to say, but I will anyway… The rest of the currencies fell in behind the Big Dog, euro, and look very sickly once again… 

Gold found a way to gain back some of its $12 early morning loss, and ended the day down $10, with a price of $1,737.90. Silver also fought back a bit and turned its early morning loss of 18-cents to a loss of 7-cents and climbed back over $19… Silver’s close was $19.09

The price of Oil was steady Eddie yesterday and remained in the $90 range all day… I also found this on this morning: “Oil clung to $90 at the conclusion of a volatile session after Saudi Oil Minister Prince Abdulaziz bin Salman warned the disconnect between the futures market and supply fundamentals may force OPEC and its allies to act.

West Texas Intermediate pared more than $4 of losses intraday to settle above $90 a barrel, still finishing cents below the previous session. The Saudi oil chief warned that “extreme” volatility and lack of liquidity in the futures market are moving prices in ways that don’t conform to fundamental supply-and-demand factors. The divergence may prompt the OPEC+ alliance to act.”

Chuck again… Yes, if you would have asked me, I would have told you that I thought something was “hinky” about the price of Oil lately… The article didn’t say what the OPEC members could do to “act”, but whatever it is, I’m sure it will help the price of Oil to rebound.

Bonds saw the 10-year’s yield rise to 3.01% to end the day yesterday… I don’t think that the rise of the 10-year’s yield is going to stop there… I’m just saying…

In the overnight markets… There’s been little movement, as the BBDXY has gained only 1/2-index point. The euro has dropped further, and unless the dollar is about to reverse this strong trend, it doesn’t look good for the single unit…  Gold & silver are not starting the day on the right foot, with both down just pennies to start the day, but down, nonetheless. 

The price of Oil has gained $2 in the overnight markets, I think, on the OPEC warning… But then only the Shadow knows with these markets! Oil is trading with a $92 handle this morning. Bonds were stuck in the mud overnight, and the 10-year’s yield remained at 3.01%… 

Well, the Bears got their revenge on the stock market Bulls yesterday, and the Bear Market rally came to an end, as the Dow lost 640 Points… I’m not turning into a stock jockey, just wanted to point out that this is the beginning of what could be a decade of no returns for stocks…  Don’t worry, I hear your broker saying to you, “stocks always come back”… But, are you of the age that would allow you to benefit from owning stocks for the next ten years before they began to rally again?  The Wall Street Journal said that stocks could be in a decade of losses… Stifel’s chief equity strategist also said the same thing… So, see it’s not just me…

OK, that was me stepping out of my lane to make that call… I don’t do that very often, so it should raise a red flag, so you don’t miss it… 

Good friend, Dennis Miller, sent me this last night that he had found on “The $675 million of senior unsecured 30-year bonds that meme-stock darling Bed Bath & Beyond issued in 2014, and that are due in 2044, with a coupon interest of 5.165%, collapsed to a new closing low of 15.8 cents on the dollar today, with some trades being below 15 cents, after having plunged all last week from the meme-stock inspired dead-cat bounce.

That would be a yield to maturity of 33%, assuming that the company pays the interest for the life of the bond and doesn’t default, and at maturity pays off the bond. But with this yield, the bond market is signaling that a default and a bankruptcy filing are imminent, with a massive haircut for unsecured bondholders”

Chuck again… this is just beginning folks for Corporations that took out so many low rate loans that are now having problems because of the debt load, and the Corporation can’t refinance the debt, because the loans would no longer be low rate!  Uh-Oh!

I see said the blind man as he spit into the wind…. It’s all coming back to me now! The zombie corporations that got low rate loans are going to see it all coming back to them soon…  Got Gold?

The U.S. Data Cupboard today has the “flash” prints of US PMI (manufacturing index) for this month… This won’t mean that the whole August PMI is this number, just what it is to date…  And I expect it to weaken once again.  This Data that gets printed today, will probably not take into consideration the awful print we saw in the Empire (NY REGION) region recently… So, to me it’s basically worthless… And I hope the markets don’t pay it any attention!

To recap…  Well, the dollar is on a roll and taking no prisoners, and I just don’t see how this will end without tears… The dollar gained 5 index points yesterday and pushed the euro to a 2-decade low.  Gold & Silver can’t buy a bid these days, as the dollar strength in the currencies, is spilling over to the metals. OPEC warned that they will act if the markets don’t straighten out… Ooooh, you just wait until your father comes home!  

For What It’s Worth.. I had a Daniel Di Martino Booth, article all lined up until I saw this article in Ed Steer’s letter this morning. This is a “made for the movies story” about a Gold heist in Russia… And it can be found here: $13 million gold heist busted at Moscow airport — RT Russia & Former Soviet Union

Or, here’s your snippet: “An international conspiracy to smuggle 225 kilograms of gold worth an estimated 760 billion rubles (roughly $12.7 million) through Moscow was thwarted by sharp-eyed customs agents, the Federal Customs Service (FTS) of Russia announced on Thursday.

The scheme involved two groups of three travelers who swapped suitcases inside Vnukovo Airport. The group, bound for the United Arab Emirates, was caught with a number of gold bars in their bags.

The attempted heist took place on August 11, the FTS said in a statement. According to the customs service, three Armenian nationals smuggled the gold into the airport in their carry-on luggage. Since Armenia is a member of the Eurasian Economic Union, they were not subject to customs controls. Once inside, however, they traded suitcases with a trio of Russian citizens, who had come in with empty baggage. The Russians were en route to Dubai in the UAE.

Customs officers monitoring the airport’s security cameras, however, noticed something strange – three passengers dragging their wheeled suitcases with considerable effort. They began following the trio and saw them swapping bags with the other men, proceeding to the gate for their Yerevan flight with much more spring in their step. The customs inspectors decided to do a spot check on the passengers headed to the UAE, who had already boarded their flight.

“The smugglers with the valuable cargo were detained by Vnukovo customs operatives after boarding their plane,” the FTS said.

After stepping on board and checking the suspects’ bags, customs officers found 45 gold bars, the FTS said in the initial report. None of them had been declared or cleared customs inspection. All had the legally mandated serial numbers and other identification marks. The newspaper Kommersant later reported that the haul amounted to a total of 71 gold bars – 14 ingots of 12kg each and 57 smaller, one-kilo bars. 

Prosecutors said they intend to charge the group with three felonies, including criminal conspiracy and smuggling of goods designated of strategic importance.

A Moscow court ordered the three Armenian nationals jailed until September 11. They were identified as Artak Ayvazyan, Karen Darbinyan and Arman Harutyunyan, officially unemployed. Their attorneys made a motion to keep them under house arrest instead, but the court denied it. The Russian citizens were released pending trial after signing statements that they would not leave Moscow.”

Chuck Again… Whew! That was close! Can’t you see some script writer taking this story and making a movie out of it?  FWIW at its best! 

Market Prices 8/23/2022: American Style: A$ .6875,  kiwi .6176,  C$ .7680, euro .9925, sterling 1.1762, Swiss $1.0344, European Style: rand 17.0725, krone 9.7908, SEK 10.6949,  forint 414.03,  zloty 4.8103,  koruna 24, 8449, RUB 60.10, yen 137.48, sing 1.3961, HKD 7.8473, INR 79.86, China 6.8472, peso 20.07, BRL 5.1684,  BBDXY 1,294.17,  Dollar Index 109.5, Oil $92.01, 10-year 3.01%, Silver $18.96, Platinum $877.00, Palladium $2.014.00, Copper $3.64, and Gold… $1,737.74

That’s it for today…Cardinals and Cubs play 2 today in Chicago… Somewhere in Heaven, Ernie Banks is smiling! I need a new book to read… I like detective novels… And I think I’ve read just about everything that’s out there! A short-n-sweet Pfennig for you this morning, as I just can’t get myself to write about this dollar strength, other than what I’ve said so far… Whenever I hear the song that’s our take us to the finish line song today, I think of a good friend, Laura Baur, for it’s her favorite song… The Scorpions take us to the finish line today, with their song: Still Loving You…  I hope you have a Tom Terrific Tuesday today…  And Please! Be Good To Yourself!

Chuck Butler