April 4, 2023
* Currencies & metals rally on Monday
* JPM on top of the world with short paper contracts…
Good Day… And a Tom Terrific Tuesday to you! Well, it wasn’t a good night for my beloved Cardinals last night, taking one on the chin, losing 8-4. Difficult to come back after giving up 5 runs in the 2nd inning! Yesterday was a gorgeous day here in my river town. I sat outside to eat my lunch and read a bit, until the day heated up to much for me, and I went inside, sat down in my recliner, and fell asleep… I’ve not been getting a good night’s sleet for a couple of months now. I’ve developed neuropathy in my left foot, and it only shows up in the middle of the night! UGH! So, it looks like I’m back on schedule for afternoon naps, after giving them up for Spring Training games… And on top of that! I have a slight cold, that is a pain in the ask me no more questions, I’ll tell you no more lies… HA! Jefferson Starship greets me this morning with their great 70’s song: Miracles…
The dollar continued to get sold throughout the day yesterday. When I left you yesterday morning, the BBDXY had lost 2 index points, and then it continued to lose 3 more index points for a 5 point loss day. The euro is nudging up against 1.09, and the Swiss franc is nestling up to 1.10.. not yet, but it’s coming, in my humble country boy opinion! Gold gained $ 14.60 on the day to close at $ 1,985.30, and Silver tried to come back yesterday and get out of red territory, but the paper traders saw to it that it didn’t, and so Silver lost 12-cents on the day, but retained the $24 handle at $24.06…..
The price of Oil remained well bid, and moved higher in the $80 handle… I’m very interested In the markets’ reaction to OPEC’s announced 1 Million barrels of Oil production cut… I just don’t see that as a large amount, sort of like a pimple on a …. No, no, no, Chuck, you can’t say that! There was more buying of the 10-year Treasury as its yield dipped to 3.42%…
The data yesterday was not good, but… in the past couple of years, what’s bad for the economy is good for the dollar, but not yesterday… The ISM Manufacturing Index slipped further down the greased pole and came in at 46.3% VS 47.7% in Feb… March’s below 59 reading was the 6 month in consecutive prints that the index was below 50… I know I’ve pounded this into your heads so many times in the past that I sound like a broken record, but just a reminder for those new to class.. 50 is the level that used as demarcation of whether the economy is expanding (above 50) or contracting (below 50)…
The reason I put the data out here front and center this morning, is it is what most pundits were writing about as to why the dollar got sold yesterday..
In the overnight markets last night… The dollar bugs wrapped a tourniquet around the dollar, and stopped the bleeding, and the BBDXY gained 1 index point overnight. The BBDXY is still looking peeked… and that has the dollar bugs crying for more PPT help, which if the dollar had continued to weaken, we would have seen some intervention by the PPT… The euro did move over the 1.09 handle this morning, so the dollar bugs work hasn’t stopped the euro from moving higher… Gold is seeing some profit taking this morning, and is down $4 to start the day, while Silver is off 6-cents. The price of Oil bumped higher by a buck , and therefor trades with a $81 handle this morning… The 10-year Treasury’s yield is s strange bird these days, and has a 3.46% yield to pay…
I’m going to point out something, once again that I’ve viewed over the years… And that is, that whenever the Euro Wannabes, (Poland, Czech Rep, Hungary) start rallying, the dollar is in trouble… And that’s what we’re seeing right now, as all three have rallied VS the dollar, and I get a kick out of looking them up each day to see what they’re doing… So, we have that going for us! The Russian ruble has really been seeing some selling, which I understand, but then I don’t… Russian interest rates have plummeted from the 20% level they were paying when the markets went all armegeddon on the ruble… And you can’t get good rates of interest in Russia now, and that has a lot to do with the rubles problems… But with the price of Oil bumping higher, it should provide some cover for the ruble…
Well, I guess the markets believe that the banking crisis is over, because the Japanese yen has lost its shine, that was provided by an old title it once held…Safe Haven… Just 10 days ago, the yen was trading around 130 and getting all kinds of attention for finally waking up, but that was short-lived, and the yen soon returned to trading 133…
Speaking of the Banking Crisis… it seems that the small banks added $6 Billion in deposits last week, while the 25 Biggest banks saw withdrawals totaling $90 Billion on a seasonally adjusted basis, according to the Fed. The total of withdrawals were $126 Billion, so banks everywhere were still seeing depositors withdrawing their money… This is a becoming a real problem folks… I’m just saying.
I received a nice note from a friend, and newsletter writer himself, Rich Checken, yesterday, he had copy and pasted what I had said about Gold hanging around $2,000, and once it got above it, there would be no looking back… And he then said, ‘I said those same words at the Investment U conference last week”, Does that mean great minds think alike? I’ve known Rick for sometime, but I know his uncle even longer… Michael Checken is a cancer survivor like me, and he always reminds to be “live strong”…
Well the pound sterling is at it again… What? I here you asking… Well, remember last year when sterling was rallying better than most currencies, sans the Russian ruble? And I kept telling you to be careful here, because the U.K. had dept problems of their own, inflation problems of their own, and a currency that’s all their own, and so bad data can drive a currency downward quickly… And it did… But now sterling is back on the chain gang (Pretenders) and is on the rally tracks again… And again, all I’ll say is be careful with this currency…
3 different people sent me this article that appeared on www.wallstreetonparade.com and so when I received the 3rd one, I decided I had better read it… The article was about how After Being Criminally Charged for Rigging Precious Metals, JPMorgan Chase Controls 53 Percent of All Precious Metals Contracts Held by Banks, that’s all the short paper trades folks… held by one entity… how does that make you feel about JP Morgan as an entity? I like the article so well, I highlighted it in the FWIW section today, so you won’t want to have missed that !
Well, with all of the layoffs that have been announced lately, this one seemed to garner the most attention…Micky D’s, is going to layoff a large number of workers, the number hasn’t been announced yet, but will be soon… That one kind of gets to you, doesn’t it? I mean what’s been the one common thing across America no matter where you went, you could find a McDonald’s, and 1/4 Pounder With Cheese would be the same in Portland as it is in Miami… McDonald’s isn’t going down, but this announcement sure makes me feel like they are… The have been a constant in our lives…
My wife made me stop eating my beloved 1/4 pounder with cheese sandwiches quite a few years ago now, and every now and then I think, “I could eat it before I got home, but then what would I do with the trash?, darn evidence!” HA!
I once got a call from head of King World Publishing, telling me to stop pasting stories from their publication, which at the time was printing a lot of Richard Russell’s works… So, I did… But now this article talks about the derivatives in Gold that JP Morgan has, and is written by Stephen Leeb, and it can be found here: Leeb – JP Morgan’s Massive Gold Derivative Short Position May Be Larger Than The Bank’s Assets | King World News
Or, here’s the snippet: “March 25 (King World News) – Dr. Stephen Leeb: “What I lose sleep over is how much exposure does a bank like JP Morgan have to the [gold] derivative market. This is not fraudulent but it’s an open secret. In fact [laughter] it’s no longer a secret because they’ve been penalized so much for it. They’re trying to control the price of gold. I mean when you sort through all of these derivatives, what’s JP Morgan’s short position [in gold]? I can imagine it being much more than the assets in the company. And if gold takes off and it gets out of control then it’s ‘Katy, bar the door.’ You don’t know what is going to happen. So that’s the real threat in my opinion. I doubt that JP Morgan even knows how much of a threat it is but they’ll find out if all the sudden you see the price of gold shoot up $1,000. But this is a vicious circle because when gold gets set to move, and it’s creeping up toward all-time highs all the sudden…”
Chuck again… I recall my former colleague, Neil George, always bowing down to Stephen Leeb, and dying to get into his publication… Anyway… that’s that! What’s the one thing, I’ve always told you would break the paper traders backs? If everyone lined up to buy physical Gold… I’m just saying…
The U.S. Data Cupboard today, has March Factory Orders, and by the looks of other related data and how badly they had performed in March, I’ll have to go out a limb here (don’t worry it’s a big fat limb) and say that I expect Factory Orders to be negative in March… So there!
To recap… The currencies and metals (not Silver) rallied yesterday, and most observers believe the dollar was sold because of the weaker than expected IDM Index… Here’s the markets thinking on this: Bad data makes the FOMC think long and hard about another rate hike… Therefore the dollar loses some steam power… Mickey D’s is laying off workers, what’s up with that? And if derivatives are your cup-o-tea, then you’re in for a treat with today’s Pfennig!
For What It’s Worth… I told you above that I had the, as Paul Harvey would say, “Now the rest of the story”… And you can find it here: After Being Criminally Charged for Rigging Precious Metals, JPMorgan Chase Controls 53 Percent of All Precious Metals Contracts Held by Banks (wallstreetonparade.com)
Or, here’s your snippet: “According to the Federal Deposit Insurance Corporation (FDIC), there were 4,706 federally-insured banks and savings associations in the U.S. as of December 31, 2022. Of those, according to the quarterly report released last Friday from the Office of the Comptroller of the Currency (OCC), a little less than one-quarter found a reason to engage in derivative trading activities.
As of December 31, 2022, just 1,139 FDIC-insured commercial banks and savings associations reported trading of derivatives in the fourth quarter of 2022, according to the OCC. Ostensibly, instead of running a derivatives casino, the other three-quarters of taxpayer-subsidized banks were doing what taxpayers want federally-insured banks to do: make business loans; provide affordable mortgage loans to homebuyers; provide checking accounts devoid of hacking, identity theft and predatory overdraft fees; and not blow up the bank by getting in bed with derivatives, crypto or dodgy Wall Street IPOs.
As it does each quarter, the OCC report rang this alarm bell:
“A small group of large financial institutions continues to dominate trading and derivatives activity in the U.S. commercial banking system. During the fourth quarter of 2022, four large commercial banks represented 88.2 percent of the total banking industry notional amounts [of derivatives] and 62.5 percent of industry net current credit exposure (NCCE).”
Those four banks are Goldman Sachs Bank USA with $52.6 trillion in notional (face amount) derivatives exposure; JPMorgan Chase Bank N.A. with $49.5 trillion in notional derivatives exposure; Citigroup’s Citibank with $47 trillion in notional derivatives exposure; and Bank of America with $19.4 trillion in notional derivatives exposure.
One area that particularly stands out in the current OCC report is data showing JPMorgan Chase Bank N.A. held $200.12 billion in precious metals derivative contracts at its federally-insured bank as of December 31, 2022, versus a total of $378.12 billion for all banks in the U.S. holding derivatives. That’s one bank holding 53 percent of all precious metals contracts in the U.S. banking system.”
Chuck again… the article is long and should be read at the website provided for the full story…
Market prices 4/4/2023: American Style: A$ 6754, kiwi .6297, C$ .7445, euro 1.0908, sterling 1.3494, Swiss $1.0944, European Style: rand 17.8432, krone 10.3057, SEK 10.3273, forint 345.28, zloty 4.2828, koruna 21.4819, RUB 79.41, yen 133.02, sing 1.3270, HKD 7.8499, INR 82.33, China 6.8833, peso 18.09, BRL 5.0649, BBDXY 1226.07, Dollar Index 102.03, Oil $81.09, 10-year 3.46%, Silver $23.94, Platinum $1,002.00, Palladium $1,480.00, Copper $4.05, and Gold… $1,981.66
That’s it for today… Congratulations to UConn for winning this year’s NCAA Men’s Basketball Championship… On Sunday LSU had won the women’s Basketball Championship! I tore up my bracket after the first weekend of games in the men’s tournament! UGH! One of these days, I’ll get it right… And if you believe that, I’ve got a bridge to sell you! Things are just so darn crazy in the world these days, makes you want to just hunker down and close the hatches so you can ignore it all, and maybe, just maybe it’ll all go away… And then again pigs may fly, right? Well, our Blues fooled around and didn’t make the playoffs this year, and that’s a real shame if you ask me… Time to get the golf clubs out boys… see you next fall… The Temptations take us to the finish line today with their great song: I Wish It Would Rain… I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!
Chuck Butler