Welcome To May!

May 2, 2022

* The dollar is still being bought hand over fist… 

* Silver gets sold for 9 consecutive days! 

Good Day… And a Marvelous Monday to you! And Welcome to May! Yesterday was May Day, did you dance around the May Pole? May brought with it a simply beautiful day yesterday, Chamber of Commerce day for sure! Some late game hitting saved the Cardinals yesterday, after putting people to sleep for the first 7 innings… Our Blues start their Stanly Cup Playoffs series tonight with the Wild… These two teams are very much alike, an therefore I think the series will go 7 games… Jimmy Buffett greets me this morning with his song: A Pirate Looks at Forty…

Well, that was some performance by the dollar on Friday! The BBDXY saw an 8 point gain in the index! 8 Points! The BBDXY ended the week at an astronomical 1,249! This has gotten out of hand, folks… the good folks at GATA sent me this ditty that they pulled from Reuters on Saturday, regarding the dollar, so here goes: “The dollar’s race to two-decade highs is leaving a trail of destruction in its wake, exacerbating inflation in other countries and tightening financial conditions just as the world economy confronts the prospect of a slowdown in growth.

This year’s 8% gain by the dollar against a basket of currencies is driven partly by bets that the U.S. Federal Reserve will raise interest rates faster and further than other developed countries, and partly by its status as a safe haven in times of turbulence.”

Chuck Again… And I have to question the mental capacity of those dollar bulls that are just shrugging off the fact that the FOMC will be raising rates as soon as this week, and that the U.S. economy is already in negative growth, and what the rate hike will do to that… I’m just saying…

Gold found a way to gain $2.50 on Friday, but Silver was down again on Friday, this time to the tune of 38-cents, which Ed Steer pointed out in his Saturday letter, was the 9th consecutive down day for Silver…

The price of Oil rose late last week to close the week at $105, and Bonds got sold with the ten year Treasury’s yield at 2.93% to end the week…

In the overnight markets last night… It’s been a mixed bag of nuts, with the dollar losing some ground, and then coming back… Gold is off $21 in the early trading and it appears that Silver will make it 10 consecutive days of being down as it is down 15-cents in the early trading. UGH!  It’s a crying shame what the price manipulators are doing to Silver and Gold, especially now that inflation is soaring…  

The price of Oil has given back its gains from last week overnight, and is down $4 as I write, which puts it trading at $100… Bonds are bonds, and they go back and forth, trying to reach 3% in the 10-year, but get pushed back every time it appears there will be a breach of the 3% level… I do believe that we’ll get there, no need to rush,,,

If I were still working, and had income coming in, I would be backing up the truck for more Silver, right now… The physical demand is still strong, and the supplies are narrowing, I see that as a good fundamental reason to buy Silver at these prices below $23… Besides, my wife would begin looking up the phone number of the nut house, if I were to buy any more Silver! But for those of you, who haven’t bought enough Silver, this is your Blue Light Special… in my humble opinion that is!

Well, I guess next time the markets will pay attention to the GDP Now data that the Fed Atlanta puts out, for they told us months ago that the 1st QTR GDP was going to be negative! And a negative -1.4% is what it turned out to be… of course I have my suspicions about the number, being somewhat goosed so it didn’t look so bad, not that negative -1.4%, looks good!

And the Fed/ Cabal/ Cartel is going to hike rates 50 Basis Points (1/2%) on Wednesday this week, and talk tough about hiking it another 50 Basis Points in 6 weeks when they meet again… Fed. St. Louis President, James Bullard, says that he wants to see the Fed Funds Rate at 3.5% at year end… Counting this week’s meeting there are 6 more FOMC meeting this year… 50 Basis Points at each meeting would put rates well over 3.5%… So, is that what we’re going to see in the coming months?

I doubt it seriously, folks… By the time they get to the September meeting, I would bet a paycheck (I’m retired ha!) that the Fed balks at hiking rates 50 Basis Points, and will be talking about stimulating the recession that’s going on in the U.S.

And even IF, and that’s a BIG IF, the FOMC gets to 3.5%, they’ll still be behind the inflation 8-ball! We’ll still offer negative real rates on our bonds, so step right up the auction window and buy some negative yielding bonds, they’ll look real nice in your investment portfolio!

I took notice this morning of an article that talked about how the Covid Lockdowns in China are putting the weight of that on what they feel will be lack of demand in Oil…  Let’s see, it’s the summer driving season, and it’s the first time in 2 years, that families can get out without feeling the boogeyman (Covid) was chasing them. And they think that demand for Oil/ Gas will dampen?  I’m not buying it… 

I also noticed that it was the first asset to be weakened on the China Lockdowns… No mention in the article about all the foodstuffs and goods from China that will not make it out of the Port because of the lockdowns…  I know, I’m beginning to sound like a broken record, with my harping about how the lockdowns are going to cause shortages everywhere in everything… What I can’t believe is that no other economists, or analysts are talking about this…  Reminds me of 2001, when I wrote the white paper, the Decline of the Dollar, and I was the only person out there talking about how the dollar was getting ready to go into a long term downward trend… And then in Feb 2002, things turned for the dollar in the direction I said it would… 

The U.S. Data Cupboard doesn’t have anything as important as last week’s 1st QTR GDP, but it does have some real economic data for us, and it starts today with the ISM (manufacturing index), which has been slipping lately, still well above the 50 line but slipping nonetheless. We will end the week with the April Jobs Jamboree! That old cooked, massaged, wrangled until they get the number just right, BLS Jobs report… Right now the forecast is for a gain of 400,000 jobs created in April… It’s too early in the year for the Graduate hiring to begin, so I don’t know what’s up with the forecasters… 

I had a dear reader send me a note last week and I’ll just let him say his piece:
“Here is an idea. Electronic billboards along highways.
Two screens to display alternately every other day.
Day one, the US debt clock in real time.
Day two, the Pfennig with conclusions flashing in red.”

Now, that’s the first time I’ve had that idea sent to me… I’ve been nominated for Fed Chairman several hundred times, and President of the country a few dozen times, through the years, but never this… So, thank you!

To recap today… The dollar is still being bought hand over fist, and in the overnight markets last night it was mixed trading, so at least there was that…  Gold & Silver are both down big to start the day today, hopefully they can get back to even as the day goes along.  9 consecutive down days for Silver is pretty brazen don’t you agree? The price manipulators have really outdone themselves here….  

For What It’s Worth… Well, as I’ve been telling you, inflation is not just a U.S. only problem… And this article talks about how inflation is soaring in the Eurozone, and the ECB isn’t doing squat to combat it…  And the article can be found here: inflation latest: eurozone breaks another record in April 2022 (cnbc.com)

Or, here’s your snippet: “Inflation in the euro zone has hit a record high for the sixth consecutive month, sparking further questions over how the European Central Bank will react.

Headline inflation in the 19-member region reached 7.5% in April, according to preliminary estimates by Europe’s statistics office released Friday. In March, the figure came in at 7.4%.

European Central Bank Vice President Luis de Guindos tried to reassure lawmakers over rising prices on Thursday, saying the euro zone is close to reaching peak inflation. The central bank sees price pressures diminishing in the second half of this year, although energy costs are expected to keep inflation relatively high.

The latest inflation reading comes amid concerns over the ongoing war in Ukraine war and subsequent impact on Europe’s energy supply — and how this could affect the region’s economy.

Rising energy prices contributed the most to April’s inflation rate, though they were slightly lower than the previous month. Energy prices were up 38% in April on an annual basis, compared to a 44.4% rise in March.

Chuck again… no wonder the currency experts are thinking that the euro could fall to parity with the dollar!  The ECB has gone soft, and they have no cajones to hike rates and stem the selling of the euro, and combat inflation… Where’s Wim Duisenberg, Hans Tietmeyer, and other hawk, ECB presidents of the past?  Long time passing… 

Market Prices 5/2/2022: American Style:  A$ .7057,  kiwi .6434,  C$ .7960, euro 1.0522, sterling 1.2886, Swiss $1.0263, European Style:  rand 15.8972, krone 9.4308, SEK 9.8820,  forint 359.58,  zloty 4.4495,  koruna 23.4539, RUB 71.15, yen 129.84, sing 1.3856, HKD 7.8467, INR 76.31, China 6.6085, peso 20.40, BRL 4.9960, BBDXY 1,246.38, Dollar Index 103.38, Oil$100.64, 10-year 2.91%, Silver $22.63, Platinum $933.00, Palladium $2,268.00, Copper $4.44, and Gold… $1,875.31

That’s it for today… kinda short-n-sweet today… I get to see my dentist this Thursday, so no Pfennig that morning, but other than that, I’m here all week, try the veal, and tip the waitresses! I’ve come down with a head cold, that’s driving me crazy! The dermatologist really hurt me again on Thursday last week, and my head has been pounding with pain since… She told me that everything was healing fine, and that I didn’t have to come back for 4 months!  My scalp looks like a road map, but I guess it had to be… Good Luck to our Blues! The Blues have been a good road team this year, so let’s hope that continues in the Playoffs! Cardinals and Royals at Busch today for a game day!  Maroon 5 take us to the finish line today with their song: Harder To Breathe…  I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler