May 31, 2022
* Currencies end the week up VS the dollar
* But the dollar roars back in the overnight markets last night…
Good Day… And a Tom Terrific Tuesday to you! How was your Memorial Day Holiday? Did you take a moment to remember someone in your family’s history that fought for our freedom? I did, and almost broke down in tears… All my kids and grand kids were here yesterday, to celebrate the holiday. I cooked them some yummy pork steaks, and the grand kids braved the cold pool water and swam. The weather was Chamber of Commerce weather, and so, everyone had a grand day! The Rascals greet me this morning with their song: A Beautiful Morning…
Well, with yesterday, being a holiday, and the NY Casino banks closed, one would have thought that Gold & Silver would have nothing but green lights to take them higher, without interference… But Noooooo! The European and Asian banking arms of the NY Casino Banks took up the slack, and played games with Gold & Silver all day yesterday. Gold ended the day flat as a pancake (Head East), but at one point in the day the green lights were leading Gold higher and it climbed to $1,867, only to see that wiped out, and the sellers allowed Gold to finish the day unchanged… Silver on the other hand didn’t fare too well, and lost 16-cents on the day. Gold closed yesterday at $1,855.10, and Silver at $22.05.
The dollar, which had been sold going into the holiday weekend, finished yesterday down again, with the BBDXY at 1,221.63… The economic data late last week was not good for the dollar, fundamentally speaking, and while I would like to think that fundamentals are a part of dollar pricing, I know better… The real mover the last couple of trading sessions has been the price of Oil… Oil trades this morning with a $118 handle… Putting the screws to us is what this represents, folks, and if you don’t see that for what it is, then… Well, I don’t know what to say…
In the overnight markets last night, the dollar was bought, by the bucket full, and the BBDXY rose to 1,225 this morning… Gold is down $6 and Silver is down 20-cents in the early trading today… Why these two are down befuddles me… But then I’m someone that think logically, and the logics tell me that Gold & Silver should be soaring right now…
There’s a piece of information on the ruble and yuan in the Bloomberg.com this morning, so here’a snippet of that article: “The emerging multi-polar world now includes foreign-exchange markets — as China and Russia, the biggest challengers to U.S. supremacy, boost direct trading between their currencies.
Monthly volumes on the ruble-yuan pair have surged 1,067% to almost $4 billion since the start of the war in Ukraine as the two nations seek to reduce their reliance on the dollar and boost bilateral trade to overcome current and potential U.S sanctions. The spike coincides with a rally in the ruble to a five-year high against the yuan.”
I attended a Happy Hour with my former colleagues at EverBank on Friday last week, and at that event, Chris Gaffney told me something that I had not read or even heard about, and that is that the Brazilian Central Bank has been on strike for over a month now! And that got me thinking about the Brazilian currency, the real… The real has been on the rally tracks, all the while the Central Bank has been on strike… Hmmm… Maybe, just maybe, the don’t need a Central Bank in Brazil! I’m just saying…
Hey, did you hear or read about the Fed/ Cabal/ Cartel’s holdings? The folks at www.wallstreetonparade.com spelled it out for us last week, so I’ll let them explain this to you: “the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of all outstanding U.S. Treasury Securities with 10 to 30 years remaining until maturity.”
Does that concern you? Probably not, because the total size of the Treasury market is some $22 Trillion… But, to me, this is concerning, because no one entity should be allowed to have a such a concentrated position in our financing mechanism… The other thing that bothers me is that, while we’ve been told that the Fed Heads will simply allow bonds to mature and not reinvest, what happens if they have to sell their bonds? Well, for that one I have an article in the FWIW section today that will answer that question, and hear me now, so you can listen to me later, you’re not going to like the answer…
So… with the price of Oil soaring to $118, who do we blame for this? Well, if you’re part of the Government, you blame the Oil companies… But… if you’re not part of the Government, you blame the government! That’s what I do! As a part of their Green Deal, they have basically shut down Oil production in the U.S., making us have to buy our Oil from terrorists… And do you believe for one minute that the terrorists want to give us a discount?
The economy is on the tenterhooks, and the price of gas that we use every day, is rising and taking huge chunks out of our disposable income… And you can thank the Government for that… “I’m from the government and I’m here to help.” Ronald Reagan said that those were the terrifying words known…
I keep telling you that inflation is not just a U.S. thing… It was reported over the weekend that Eurozone inflation has hit 8.7%… And that’s true, unaltered inflation folks, no hedonic adjustment for the Eurozone… And like it was with the dollar… When there are inflation problems, the markets begin to think about rate hikes… And with the belief that the rate hikes will calm inflation, they mark up the currency… Probably a great example of putting the horse before the cart… And so it is with the euro, which a month ago, was heading to parity with the dollar, and now trades with 1.07 handle…
The U.S. Data Cupboard today, has the S&P/Shiller Home Price Index for March… This data has shown home prices slipping the last few months, and I don’t expect that to have changed in March… The data this week will be sporadic, but will culminate with the Jobs Jamboree on Friday…
Last week’s data included a revision for 1st QTR GDP, and that revision was not a good one, with GDP hitting negative -1.5%,… The Fed Heads preferred inflation calculator, the PCE (Personal Consumption Expenditures) slipped in April from 6.8% to 6.3%… But don’t get your hopes up here folks… this is just a blip and most likely will return to show inflation rising next month.
To recap… The dollar continued getting sold into the holiday weekend, but has rebounded in the overnight markets of last night. Gold and Silver aren’t faring well in the early trading today, while the price of Oil soars… Chuck is concerned about the Fed’s holdings, and what could happen if they have to sell their bonds… And inflation soars in the Eurozone…
For What It’s Worth… OK, I talked about this above this morning, and how it will tell you the answer to the question, of what happens if the Fed Heads need to sell bonds? And it can be found https://www.reuters.com/markets/us/fed-carrying-330b-unrealized-losses-its-asset-according-q1-financial-statement-2022-05-27/
Or, here’s your snippet: “The U.S. Federal Reserve is carrying $330 billion in unrealized losses on its holdings of U.S. Treasury and mortgage-backed securities as of the end of March, according to newly released financial statements showing the impact of rising interest rates on the market value of the Fed’s balance sheet.