Understand This… Things Are Now In Motion, That Can’t Be Undone… Gandalf The White…

  • currencies and metals rally on Monday
  • But get sold overnight…

Good Day… And a Tom Terrific Tuesday to you!  And Welcome to June! Pfennig Tradition calls for this:  “June is busting out all over, all over the meadows and the hill, buds are busting out of bushes, and  the rompin’ river pushes, Every little wheel that wheels beside a mill! 

We finally held our family celebration for grandson, Braden’s Birthday this past weekend. He turned 13… I thought for a moment and said, “when I was 13 I was in high school”, and everyone looked at me like I was crazy… My beloved Cardinals won 1 of the 3 games with the Phillies… And had to play that stupid, Sunday night game! Stevie Wonder greets me this morning with his song: My Cherie Amour…  

The end of the week last week was interesting in that the data that printed wasn’t dollar friendly, and for once, unfriendly dollar data , saw the dollar get sold…  And going into the weekend the BBDXY had lost 6 index points, to 1,250… Gold ended the week at $2,326, after losing $26 on Friday, and Silver ended the week at $30.38, after losing 73-cents on Friday… 

The price of Oil has seen its level fall out of bed since Thursday last week, and closed yesterday with a $73 handle… First, it was reported that our friends (NOT!) at OPEC were going to extend their output reductions to help the price of OIL… and then it was reported that the knuckleheads at OPEC were going to increase supply… Wait, What? Left the markets confused, and the markets don’t like to be confused… And the 10-year saw its yield drop to 4.41%, to end the week.  

Yesterday, the dollar drifted throughout the day, and remained at 1,250 in the BBDXY as the day closed. Gold gained back the ground it lost on Friday, gaining $24 to close at $2,350.75, and Silver also gained it’s lost ground, by gaining 35-cents to close at $30.73… 

In the overnight markets last night… There was little to no movement in the dollar, and the BBDXY starts today at 1,250…. Gold is getting sold again, what’s up with this up one day, down the next trading pattern? It’s the markets not being able to pick a lane… One day they are convinced the economic data tells them a rate cut is in the cards, and that’s followed by the next day, the markets believing that there will be no rate cut…  The markets are so wishy-washy these days… So, dependent on what the Fed Heads will do… I would think that they are aware by now that whatever the Fed Heads to, it will be the wrong thing to do? Tsk, tsk, markets… 

So, Gold is down $19 to start the day, and Silver is getting the snot kicked out of it, and is down 96-cents to start the day, and has fallen below the $30 figure… UGH!  The short paper traders are really going after Silver this morning… I’ve come to the conclusion that the overall direction of Gold & Silver will be determined by the short paper traders…  So, whether or not Gold goes higher to $3,000 will be determined by the short paper traders…And if it does, the short paper traders will make it seem like it will never happen, drawing out the upward move, just like they’ve done till now… I’m just saying… 

The price of Oil remained down in the $73 handle overnight, and the 10-year dropped some more to 4.36% yield to start our day… So, if the bond boys think the data tells them a rate cut is in the cards, as evidenced by the drop in bond yields, then what’s going on with the metals? Just shows to go ya, that the short paper traders are ruling the roost at the moment, now doesn’t it?  UGH!

Well, the data late last week had a lot to do with the movements in the dollar and metals.. The Big Data print was the PCE…  So, let’s go right to the data prints… 

The U.S. Data Cupboard late last week had the awaited on, PCE inflation calculation, this supposedly is the Fed Heads’ favorite inflation calc… So, here’s the skinny on the report: Inflation rose about as expected in April, with markets on edge over when interest rates might start coming down, according to a measure released Friday that is followed closely by the Federal Reserve.

The personal consumption expenditures price index excluding food and energy costs increased just 0.2% for the period, in line with the Dow Jones estimate, the Commerce Department reported.

On an annual basis, core PCE was up 2.8%, or 0.1 percentage point higher than the estimate.

And Wolf Street.com had this to say about the PCE: “Fed’s Wait-and-See on Rate Cuts Supported by Worst 6-Month “Core” & “Core Services” PCE Inflation since mid-2023
Not just housing, but also other core services. However, durable goods inflation is back to normal.”

And Forbes had this headline: “Jerome Powell’s Federal Reserve is stuck in a self-defeating paradox that makes cutting rates more difficult, economist warns”

Chuck again… yes, a lot to be said about one report, but since the markets are so tuned to what the reports tell us about what the Fed Heads might or might not do at their next meeting is the main thing right now. 

Well, it’s a good thing the folks at the European Central Bank (ECB ) listened to me (as if!) and didn’t cut rates early, because inflation was falling… You may recall me telling the ECB to not cut because inflation is sticky, and would come back…  Here’s Reuters with the skinny: “Euro zone inflation rose in May, data showed on Friday, in a sign the European Central Bank still faces a slow and uncertain journey to reach its goal of fully reining in prices.”

Now, if only the Bank of Canada will listen to me… They seem to be hell bent and whisky bound to cut rates a few times this year… UGH! 

It was reported last week that the Bank of Japan had spent $62 Billion defending the yen… And for what? to see the yen immediately, go right back to getting sold? And to see the yen fall to 157 once again?  I just don’t get what these Central Banks think they are going to accomplish by wasting reserves… 

In my attempt to bring the news of digital currencies to the forefront, this was in the needtoknow.com site: “CNBC News reports that hundreds of smaller US banks are at risk of failure. There is a war on cash and many businesses are refusing cash. The World Economic Forum (WEF) just held a summit to discuss the banning of physical cash in favor of an all digital currency system. Private bankers have wrested control over money from governments and central bank digital currency gives globalists even more power. COVID helped the push to eliminate cash and established contact lists via vaccine passports. This is all about control and surveillance.”

I find that seeing CNBC actually report this is bringing this news to the masses… I get it, the younger generation doesn’t know how to carry cash, they only know how to charge something on a card… And that’s exactly what the Gov’t wants to see, because they are waning the country off of folding cash… Want to lose the remainders of your liberties? Well, going to digital currencies will do just that, and before you know it, you’ll be asking everyone around you, how that happened? 

There’s nothing we can do about it now… WE The People should have stood up and said, “Don’t take our cash away!” But we didn’t, like the sheeple we’ve been trained to be, we unknowing to us, started using our credit cards to buy everything…   

“Understand this. Things are now in motion that cannot be undone.” — Gandalf the White

The U.S. Data Cupboard late last week also had the Personal Income (+.03%), and Personal Spending (+.02%)… So, spending in the U.S. is down, and that’s not what the Gov’t wants to see, they need those tax receipts to come in hot and heavy, and that’s not happening… 

To recap… The dollar got sold going into the weekend, and then drifted yesterday to start the week. Gold & Silver got sold going into the weekend, and rallied on Monday… So, after 3 trading days, we’re back to where we were mid-week, last week…   Chuck goes into his Gandalf the White impression this morning… 

For What It’s Worth…I found this over the weekend, and thought it to be FWIW worthy… The title of the article is Jerome Powell’s Federal Reserve Is Stuck In A Defeating paradox that makes cutting interest rates more difficult, economists warns… And it can be found here: Jerome Powell’s Federal Reserve is stuck in a self-defeating paradox, economist warns | Fortune

Or, here’s your snippet:The Federal Reserve has talked financial markets into creating an easier environment, which paradoxically makes lowering rates a more difficult task for the central bank, a top economist said.

The Bloomberg U.S. Financial Conditions Index indicates that the availability and cost of credit across money, bond, and equity markets are significantly more favorable today than when the Fed began raising rates in March 2022, according to Apollo chief economist Torsten Sløk.

That’s due to the central bank’s pivot in November, when Chairman Jerome Powell signaled that inflation was cooling enough to halt rate hikes and start thinking about when rate cuts could begin.

Wall Street interpreted the comments, incorrectly as it turned out, to mean easing would be imminent and that as many as six cuts would happen in 2024, sparking a massive stock market rally.

Meanwhile, the federal government has been spending trillions of dollars on infrastructure, green-energy initiatives, and semiconductor production capacity.

As a result, the economy has remained strong as this fiscal stimulus continues to fuel growth while easier financial conditions offset Fed rate hikes, Sløk noted.

In fact, the economy was so strong earlier this year that inflation readings came in above forecasts and showed signs of reaccelerating. That forced Powell to warn that rates could stay high for “as long as needed” because inflation appeared to be taking longer than anticipated to reach the Fed’s 2% target.

Still, he later acknowledged that further rate increases were unlikely and reaffirmed that the Fed’s next move—whenever that will be—is likely a rate cut.

And that’s precisely the mistake Powell is making, in Sløk’s view.

“Looking ahead, with the stock market hitting fresh all-time highs and fiscal policy still supportive, the expectation in markets should be that the economy will continue to accelerate over the coming quarters,” he wrote. “You can call this the Fed Cut Reflexivity Paradox: The more the Fed insists that the next move in interest rates is a cut, the more financial conditions will ease, making it more difficult for the Fed to cut.” 

Chuck again… I thought I would give you the majority of that article, because it tells you the story that I’ve been telling you, that interest rates can’t be cut, because inflation is still raging… And if they are cut, then we might as well kiss our dollar strength away… I’m just saying

Market Prices 6/ 3/ 2024: American Style: A$ .6644, kiwi .6169, C$ .7312, euro 1.0866, sterling 1.2765, Swiss $1.1200, European Style: rand 18.6661, krone 10.5773, SEK 10.4617, forint 361.12, zloty 3.9594, koruna 22.7243, RUB 86.96, yen 154.80, sing 1.3470, HKD 7.8142, INR 83.53, China 7.2378, peso 17.90, BRL 5.2811, BBDXY 1,250, Dollar Index 104.24, Oil $73.02, 10-year 4.36%, Silver $29.76, Platinum $1,008.00, Palladium $96.90, Copper $4.57, and Gold… $2,331.10

That’s it for today… my oncologist was upset with me yesterday, at first, as the scale reported that I had lost 10 lbs in 3 weeks… But when I told her that my wife had been sick, and not cooking dinners for me, she calmed down… Losing weight is ok with her, not just so fast! That indicates something is awry… All the blood work looked good, and now I’m on my new chemo… I’m somewhat worried about how I’ll tolerate this one… I hope my worries are for naught! Sniff N’ The Tears, take us to the finish line today with their song: Driver’s Seat…  I hope you have a Tom Terrific Tuesday today, and please oh please, with sugar on top, Be Good To Yourself! 

Chuck Butler