- Currencies rally on Friday, but get sold overnight last night
- That old Debt….
Good Day… And a Marvelous Monday to you! Well, my fumbling, stumbling, beloved Cardinals found a way to blow leads in the final two games of the series with the Yankees, and got swept! There’s not a lot in the way of data this week, so we’ll be subjected to the Gov’t’s attempt to divert our attention away from the problems… Look, there, I already started today with the attack… I’m still feeling the effects of my infusion last Thursday… I normally get over them in one day, but this time it has held onto me for 4 days… UGH! J.D Southern greets me this morning with his song; You’re Only Lonely
And that’s exactly how I felt when I had no “Tech” person to handle my problems last week… This working as a lone wolf has its benefits, but not having someone to go to when I have problems is not one of them! Oh well, que sera, sera…
The U.S. dollar ran into some selling on Friday, and the BBDXY was lowered by 3 index points, to 1,202… The dollar had a brief rally on Thursday last week that took the BBDXY to 1,205, and that rally came about because the PPI (wholesale inflation) leapt higher to gain .9% in July… Now, we all know that PPI leads to higher CPI (consumer inflation) and that would be another chip for the rate cut bugs… Opposite of what should happen when a country debases their currency, right? But we live in this era of opposites, so that’s that!
Gold is in the summer swoon, and investors will come back in September, but for now Gold has to be strong and resilient to maintain its value… And on Thursday last week Gold lost $21 and Silver lost 60-cents… And on Friday, Gold tried like the dickens to gain ground but was snuffed out by the short paper traders every time it mounted a charge, and ended the day down 30-cents… So, flat if you will.. And Silver did the same as Gold and was down a plug nickel… yes, 5-cents…
Speaking of Gold… this from Goldmoney.com “A stand-out feature was the scale of stand-for-deliveries in the Comex gold contract, at 90.6 Tonnes from 31 July so far, reflecting the expiry of the August contract. 267.5 Tonnes of silver were also stood for delivery. To put these numbers in context, 861 Tonnes of gold have been stood for delivery since 1 January.”
In my mind, this is a very good sign for Gold (& Silver), as it means that more investors are taking deliver, of physical Gold!
The price of Oil bumped higher for the first time in over 10 days, on Thursday and then gave it back on Friday, to end the week with a $62 handle… And the 10-year continued to see buyers until it didn’t… And it didn’t on Thursday after the PPI printed, and the bond boys got spooked… The 10-year ended the week with a 4.32% yield… Now that was quite the turnaround wasn’t it? I had reported that the 10-year’s yield was 4.20% on Thursday morning…
In the overnight markets last night… the dollar was bought by a bit, with the BBDXY rising 2 index points, and we start the day/ week at 1,204… Gold is firmer this morning, gaining $12 to start the day/ week, and Silver is up 11-cents. I think the markets will be subdued this week as everyone is looking toward the Kansas City Federal Reserve’s Jackson Hole Symposium starts on Thursday… But then, what do I know? A lot, thank you! HA!
The price of Oil has bumped higher overnight and starts our day/ week with a $63 handle… There’s an Oil glut right now according to our friends (NOT!) at OPEC… So, that should keep the price of Oil trading in a tight range… And the bond boys are keeping the selling going in the 10-year Treasury, as the yield of the bond rose to 4.32% where it starts the day/week.
I have an old friend, not saying he’s old, just our acquaintance is old… Dan Denning is his name and he writes for Bonner Privat Research group… that consists of Bill Bonner, Dan Denning and Tom Dyson. They put out tremendous stuff about investing and the data behind it…Their subscription costs, so if you interested, click the link below… Every week, Dan Denning sends me his letter… I hope he doesn’t mind me borrowing a line or two from his letter:
And further, that Americans are more tied to stocks in their 401k’s than ever before… And this plays well with my thought on the season of opposites going on.. Here’s Dan, ” investors poo poohing 2.7% annualized CPI numbers–and bidding up stocks even higher–is another example of the kind of self-deception that’s only possible at the end of a cycle. So is is believing both higher than normal CPI and PPI readings mean the Fed could cut 50 or 100 basis points when it meets next month. Madness. Hallucinations.”
Chuck again… To me, that’s all very scary… Hy Minsky called what will eventually happen, a Minsky Moment.. And speaking of something scary… It was reported last week that investors in their late 30’s have 88% of their 401k’s in stocks…
I know, I know this is a currency, metals, economies, and dolts, letter, not a stock letter… But there’s something strange going on that reminds me of the dot-com bubble.. During that bubble’s rise, there was Cisco leading the way… Just like the AI bubble that’s now building… It’s leader, will be sorted out in time, but my guess would be that it’s there right now… I’m not naming names, because that could get me in trouble… But I know you can guess who it is…
Ok… back to regimen!
Last week I talked about how the U.S. Current Debt has surpassed $37 Trillion… I’ve been banging the drum to reduce our debt for decades now… And not once have out lawmakers taken that thought to heart, and cut expenditures… Here’s where the cheese comes to bind folks.. We, as a country cannot pay down our debt, so when the financing tool for the debt comes due, we simply roll it for a new term… At a much higher rate than the original debt was held… Are you getting what I’m telling you? This cannot go on forever, in fact, I doubt it can go on past another 5 years, but then, that’s just me… And to me, this alone is NO REASON to hold U.S. dollars, except for gas, groceries and giggles…
My favorite read, Grant Williams’ Things That Make You Go Hmmm… featured the U.K and France’s debt problem they are in… So, it’s not just the U.S. with this debt problem… But, we live here and work here and have fun here, and for that we’ll get to pay for the tariffs that have been implemented, and we’ll also get to deal with higher inflation, and Companies going belly up, thus putting lots of people out of jobs… Oh Boy! Can I have another helping of this? NOT!
Are you willing to have your 401K’s denominated in nothing but Treasuries? Because that’s what it is going to come to, as countries around the world balk at buying Treasuries and there’s nowhere else for Treasuries to go, except your 401K… I’m just saying…
I know, I’m full of seashells and balloons this morning… NOT! I can’t stop on the subject once I get going on debt…
But the word is out… The U.S. isn’t going to cut expenditures, nor is it going to even attempt to do so… And for that reason alone, the FOMC is left with no choice but to cut rates to lessen the weight on the U.S. finances, but that will invite inflation back to the table, as it has been sent to the kids’ table for a while…
And will it hurt everyone? No… only you, me and the guy down the street that cuts his grass with his shirt off… The regular Joes are the ones that will feel the effects of the rising inflation… And no, I’m not one of those that believe the Rich could pay off our debt… There’s no way that could even come close, but what I do believe we could do is to raise their taxes to a rate that closer to the one we pay, 25-30%, that increase alone would help pay for some of the line items in the budget…
Got Gold? I know that owning Gold can be frustrating at times as the short paper traders take their pound of flesh… But much like the toaster oven the chef is on TV hawking, set it and forget it… Buy Gold and forget you have it if you get antsy about selling it when it looks bleak…. And when Battle Bank gets the wink and nod from the regulators to open, they will allow Gold in IRA’s… So, get ready to transfer your IRA to them, because that’s a great idea!
There’s not much going on in the world these days, with regard to monetary policy, so we’ll just move along, for these are not the droids we’re looking for…But the Jackson Hole shindig will hold the key this week… with the chief jefe speaking, the markets will want signs that he’s going to cut rates at the next meeting… If he fails to deliver, the markets will genuflect and react negatively… Who knows which way the sentiment will fall with the dollar at that point…
The U.S. Data Cupboard on Friday last week had some surprising data for us… First up was the July Retail Sales, which I had told you last week that the BHI indicated that it would be good… And it was, rising .5%… Apparently to back to school purchasing was off the record! Industrial Production for July was negative -.1%… I have something for you on Industrial Production in the FWIW section today, so stay turned!.. And Capacity Utilization slipped lower again to 77.5%… And finally on Friday, the STUPID Consumer Sentiment for August (prelim) fell from 62.5 to 57.2… Maybe, just maybe more people are waking up and smelling the coffee?
This week’s Data Cupboard will be an exercise in nothingness… We’ll see the FOMC meeting minutes from the last meeting… The only thing to look for here is how many dissenters were there to keeping rates unchanged… We should keep track of their names so we can tar and feather them when rates are lowered and inflation comes back with a vengeance!
August 21-23… mark your calendars! The 2025 Jackson Hole meeting will take place and the Fed/ Cabal Cartel Chairman, Jerome Powell will give the keynote address… This is the meeting that Quantitative Easing was first announced to the public years ago… So, we could look for fireworks, or a packet of lies… take your pick, both won’t be good for the economy… I’m just saying
To recap… The dollar got sold on Friday, but rallied overnight to get some of the loss back, we start the day/ week at 1,204 in the BBDXY… Gold is in the summer swoon, so any gains it musters is icing on the cake.. This has happened with Gold about every summer I can recall… And then Chuck goes bananas on the Debt… He goes on and on and on about it, so if you skipped it you might want to go back and see what bee got into his bonnet!
For What It’s Worth… Well, thanks to Ed Steer’s Saturday letter, I found this article about Industrial Production… We DO have to make stuff that people use, right? Anyway, you can find the article here: America Don’t Need No “Independent” Fed
Or, here’s your snippet: “Talk about hiding in plain sight. Here is possibly the most important graph ever about the flagging state of the US economy and the utter failure of Washington’s constant efforts during the last two decades to “stimulate” improved outcomes.
To wit, the US industrial production index—which measures the sum of manufacturing, energy, mining, and utility output—marched straight uphill at a 3.3% annual rate between 1954 and 2007. Yet since then it has essentially plateaued, rising by just 0.10% per annum during the past 17 years.
That’s right. The growth rate of America’s industrial foundation has plunged by 97% since the pre-crisis peak in Q4 2007. And yet June’s industrial production index, which was up a small tad, gets headlined as a sign of economic strength. In fact, the longer-term chart below screams the very opposite.
After all, there is no logic that says an economy can remain healthy and prosperous that is increasingly based on educating a shrinking number of kids, feeding an expanding national waistline at fast food joints, and changing adult diapers among the soaring share of the population composed of octogenarians. At the end of the day, you actually have to make things in order for the population to pay for taking in each other’s laundry.
As it has happened, however, during the 48 months since June 2021 the industrial production index has been negative or flat nearly half the time on a month-over-month basis. For all practical purposes, the US industrial economy is just playing “mother may I”, advancing one step forward and the next step backwards month after month. And if that’s “strong” or even a sign of anything except decaying performance, we’d suggest the English language has lost all meaning.
As it happens, the disconnect becomes even more dramatic when you compare the production of goods since Q4 2007 with the constant dollar value of goods consumption (PCE) during the same period. That is to say, cumulative real consumption of goods (durable and non-durable) rose by 62% but domestic industrial output was up by only 1.4%!
To reprise, industrial production growth has essentially ground to a halt at 0.1% per year since 2007, notwithstanding a 13.3% per annum expansion of Fed credit. Self-evidently, all that high-powered central bank money was going somewhere, but clearly it was not into the production of goods on Main Street.”
Chuck again, yes , David Stockman has hit the nail on the head here… And as he says early on in the article, you should check out the graph of industrial production… I’m just saying… And as David says in the article, if this is what you call “strong” then we have to change the meaning of the world in the dictionary!
Market Prices 8/17/2025: American Style: A$ .6511, kiwi .5936, C$ .7252, euro 1.1675, sterling 1.3540, Swiss $ 1.2386, European Style: rand 17.61, krone 10.1804, SEK 9.5579, forint 338.81, zloty 3.6404, koruna 20.9591, RUB 80.49, yen 147.55, sing 1.2828, HKD 7.8177, INR 87.34, China 7.1790, peso 18.81, BRL 5.4299, BBDXY 1,204, Dollar Index 98.00, Oil $63.50, 10-year 4.32%, Silver $38.16, Platinum $1,335.00, Palladium $1,121.00, Copper $4.52, and Gold… $3,346
That’s it for today… I think the months of receiving the infusions are finally getting to me… Ever since last Thursday, I’ve slept a lot, and my stomach hasn’t stopped gurgling… My digestive system is shot! Shoot Rudy, I couldn’t even go to the local watering hole on Friday to meet my friends! UGH! Saturday, I manned up, and cooked some smashed burgers on the Brownstone for my darling granddaughter’s family birthday celebration… I had to cede to my oldest son, Andrew to finish for me as the heat finally got to me… What a wimp I was! I used to be able to stand at the grill in any kind of heat, because I loved doing it… But the 18 years of chemo have made me a wimp… UGH! My favorite guitarist, Carlos Santana, takes us to the finish line today with his song: Europa (Earth’s Cry, Heaven’s Smile) I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler