The FOMC Dissapoints… Whom?

  • dollar remained stuck in the mud on Wednesday
  • Powell tells the markets inflation is still too high…

Good Day… And a Tub Thumpin’ Thursday to one and all! Friday is Ground Hog Day… I sure hope Phil will see his own shadow, thus forecasting 6 more weeks of winter… I really don’t care, because I’m down in S. Florida, but for my kids and grandkids back home, it matters to them! There’s only 14 more days till pitchers and catchers report to Spring Training… I took a ride over to the ballpark yesterday to see what changes that proposed last spring were taking place, and what to my wondering eye did appear… nothing new! They haven’t dug a hole or put a stake in the ground yet! I don’t know why nothing has been done yet… but it hasn’t and that’s that!  I was up all night long with bleeding in my mouth again, so I’m in no mood to Tub Thump today! Steely Dan greets me this morning with their great song: Do It Again… 

Well, the FOMC met yesterday, and Jay Powell, told the markets that they needed to get with the program that The Fed Heads were not cutting rates in March! But that didn’t change the minds of the bond buyers, who took the 10-year’ yield down to 3.94% yesterday…  The dollar didn’t move, and once again it finished the day with a 1.236 figure in the BBDXY index…  So, that meant that the currencies didn’t move either…  The Bank of England meets today, so maybe they’ll be ready to announce before I finish this letter this morning.  

Gold ended the day unchanged from the previous day… $2,037.90… And Silver was only down a penny, at $23.23… So, all the teeth gnashing, and hand wringing over what the Fed Heads were going to do, led to nothing… In The markets, that is,  except bonds, remained uninterested in the goings on… I’m still of the opinion that the Fed Heads have their hands in the cookie jar, with regards to the 10-year’s dropping yield… But they won’t tell us they are stealing cookies, we’ll have to do some under hood checking… more on that at a later date… 

The price of Oil dropped 50-ecnts yesterday and ended trading with a $76 handle.  The POTUS said he had come to a conclusion what he will do about the strike on the U.S. base camp that killed 3 soldiers, but he’s not going to tell us what that is… So… figure nothing…   And I think that’s why the Oil price dropped yesterday, because things will remain status quo in the oil region… 

In the overnight markets last night… Well, the dollar finally moved, after a week stuck at 1,236 in the BBDXY, the BBDXY gained 2 index points overnight to finally push the dollar off of 1,236.  the currencies are all down VS the dollar this morning, except, Indian rupees… go figure.. The currency that’s been stuck trading with an 83 handle for a month of Sundays, finally moved to an 82 handle… I wonder for how long?  The price of Gold is down to start the day today by $4, and Silver is up 3-cents.  Oil still trades with a $76 handle this morning, and the 10-year’s yield is still at 3.94%, awaiting for more Fed buying, in my humble country by opinion.. 

Well, before Jay Powell took the mic yesterday, and told the markets to get with the program… There was a survey that was done, and it said that “The Fed will cut rates fewer times and start them later than market hopes, according to CNBC Fed Survey’… here are some of the highlights of the survey:

Only 9% of CNBC Fed Survey respondents see the central bank cutting rates in March.

Futures markets give a March cut a 37% probability.

Futures markets have priced in between five and six rate reductions this year, while Fed survey respondents, on average, see just a bit more than three.

Well, maybe the masses get the message, but the bond boys? They refuse to admit they were wrong… The markets will make you pay for being wrong too long… I’m just saying… 

And to carry this discussion a little further… There was a report yesterday that the U.S. Treasury to issue over $1 Trillion in gross new debt in the 2nd QTR…  Now, we’ve been through this before, but I’ll go through it for all the new readers, The number of buyers of our debt is dwindling… And therefore, there are not many buyers lined up at the auction window when the Treasury puts the bonds out there…  The only way they will attract enough buyers is to jack up the yield to entice them to buy…    So, why are people buying bonds now, when higher yielding bonds are around the corner? 

Well, inflation in the Eurozone fell again in January going to 3.2% from 3.8% in December… The two largest economies in the Eurozone, Germany & France were the leaders of the drop in inflation, and this got the markets all lathered up about a potential rate cut in the Eurozone… I’m saying that if the Fed Heads see that inflation is still too high, to warrant discussing rate cuts, then the European Central Bank will follow the Fed Heads lead… So, do youself a favor over there in the Eurozone, don’t fall for all the hype…  I’m just saying… 

The U.S. Data Cupboard had the ADP Employment Report for Jan yesterday, and it showed that only 107,000 jobs were created this month… That’s down from a revised downward 158,000 in December.   Yesterday, I told you that the job openings had risen to over 9 Million…  Somehow the math doesn’t work here, because people don’t want to work any longer…  Anyway, it didn’t move the markets one iota…  And stocks? When you would expect the stock jockeys to be all upset that the Fed poo-pooed rate cuts so soon, stocks rallied…  I shake my head and wonder how this will all play out… after the everything bubble pops! 

Today’s Data Cupboard has the usual Weekly Initial Jobless Claims for last week. In addition, the 4th QTR Productivity report will print, and I’m expecting this number to plummet…  And finally, we’ll see the color of the ISM Manufacturing Index for Jan… Thinking back to the regional reports we’ve seen this month and all the negative indexes that were printed, I sure don’t see any way that the ISM will rally… I’m just saying… 

To Recap… The dollar remained stuck in the mud yesterday, and for a 5th day it remained in the 1,236 figure in the BBDXY Index. The FOMC, and their leader, Jay Powell, tried his best to tell the markets to get with the program that inflation was still too high, and there would be no rate cut in March… Did that turn the minds of the Bond boys?  No… I don’t know what it will take to get them to see things my way… 

Well, The elites’ boondoggle at Davos Switzerland is over now, and there were two highlights from the boondoggle, one was new Argentine President Javier Milei’s speech, and the other was the speech by the Heritage Foundation’s: Kevin Roberts… Both of them will probably not be invited back, as they pointed to the the crowd and told them they are the problem…  I’m proud to be a member of the Heritage Foundation, and proud of Kevin Roberts for what he stood up for at Davos! 

For What It’s Worth… I found this yesterday morning, and wanted to put in yesterday’s Pfennig, but it was already out the door… This is the Felony King himself, talking about our gov’t debt… And it can be found here: JPMorgan Chase CEO Jamie Dimon says US government debt will lead to market rebellion | Fortune

Or, here’s your snippet: “The global economy is approaching the point of no return courtesy of mounting government debt, believes JPMorgan Chase CEO Jamie Dimon, and it will lead to a massive falling-out of markets and federal institutions.

Currently the American national debt stands at $34.14 trillion—about $100,000 for every person in the U.S.—with the debt ceiling currently suspended until 2025 courtesy of a deal passed in the summer of 2023.

And although some of the shorter-term economic signals are flashing green—inflation is coming down, the Fed may by eyeing rate cuts, and employment is staying stable—the boss of America’s biggest bank isn’t convinced there isn’t a major red flag up ahead.

Speaking on a panel alongside former Speaker of the House Paul Ryan at the Bipartisan Policy Center last week, Dimon said the American government is facing a “hockey stick” effect when it comes to government debt.

He drew on the comparison of the 1980s for context, explaining that in 1982 unemployment was at around 10% while the stock market had sat stagnant for 15 to 20 years. Even with the Vietnam War, America’s debt-to-GDP ratio was around 35%, Dimon said, whereas today it sits at 100%.

“Back then the deficit during a recession—you do spend money in a recession—was 4% or 5%; today it’s 6.5% in a boom time,” Dimon continued.

He added: “If you look at that 100% debt to GDP by [2035] I think it’s going to be 130%, and it’s a hockey stick. That hockey stick doesn’t start yet but when it starts, markets around the world…there will be a rebellion.”

Chuck again.. Ok, those uplifting word are brought to you by Jamie Dimon, you know the leader of the bank with the most felony charges, including a RICO charge leveled against his bank… 

Market Prices 2/1/2024: American Style: A$ .6519, kiwi .6089, C$ .7433, euro 1.0808, sterling 1.2655, Swiss $1.1590, European Style: rand 18.7453, krone 10.5174, SEK 20.4227, forint 354.51, zloty 4.0095, koruna 23.0302, RUB 90.45, yen 146.95, sing 1.3408, HKD 7.8204, INR 82.91, China 7.1821, peso 17.25, BRL 4.9628, BBDXY 1,238.28, Dollar Index 103.63, Oil $76.26, 10-year 3.94%, Silver $23.03, Platinum $930.00, Palladium $1,005, Copper $3.85, and Gold… $2,033.52

That’s it for today, and this week, of course! Well, after the week of full sun and warming temps, we’re supposed to get another front down here this weekend, with rain… UGH!  Rainy days always get me down… Karen Carpenter sang about how Rainy days and Mondays always got her down… Me, a Monday is a Monday, no biggie, but rainy days ruin my agenda! Oh well, you’ve got to suffer through the rainy days to fully enjoy the sunny days!  My beloved Mizzou Tigers lost on the hardwood again last night this time to ahem… Arkansas! I got to watch the game of course, they lost! Oh well, tomorrow is Gound Hog Day, which is also the title of one of my fave movies… Andie MacDowell, was always a fave of mine!  Al Wilson takes us to the finish line today with his song: Show And Tell… I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!

Chuck Butler