- the dollar gets sold on Wednesday, is it profit taking?
- The IMF says, “something has to give”…
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, my beloved Cardinals lack of hitting finally did them in in their game VS Oakland yesterday, they did finish the road trip at 3-3… My dad used to tell me when I was a young man about baseball, and he would tell me that if a team plays .500 on the road, and .750 at home, they would be in contention for a pennant… So, The team is half-way there, now they have to return to their former winning ways at home… I only had one bleeding event yesterday, so that was ok… You know, I completely forgot to mention yesterday that the White Rat… Whitey Herzog, the architect of “Whitey ball” passed away at 92 years of age… The City of St. Louis, and surrounding areas, are all in mourning and the Butler House was very sad on Tuesday… The Cowsills greet me this morning with their song: The Rain, The Park, and Other Things…
Well, the dollar was getting sold in the overnight market yesterday morning when I wrote and had lost 2 index points in the BBDXY index…. The dollar continued to get sold in the U.S. Session yesterday, bringing the dollar’s total loss for the day to 4 index points… It still wasn’t enough to get the currencies out of their sick beds… Gold was up $8 on the day to close at $2,369.38, and Silver gained 12-cents to close the day at $28.29…
The IMF had something to say about the U.S. Debt yesterday, they said, “Something’s got to give”… Well, if Trump wins the presidency, he’s already making plans to devalue the dollar to promote trade, and get the trade budget back to a surplus, which would go a long way toward helping exporters. But…. by doing that inflation could become a real pain in the ask me no more questions, I’ll tell you no more lies…
Yesterday, somebody bought bonds as the 10-year’s yield dropped from 4.66% on Tuesday to 4.58% yesterday… Why would you want to tie up your funds for 10 years at a rate that will be low when all iss said and done, and if yields do continue to rise, you won’t be able to sell your bond back to the dealer, because it will be at a loss… And do you trust the U.S. Gov’t and their ability to navigate the future with this rising debt? I don’t!
And the price of Oil dropped 1.5 bucks yesterday and ended the day trading with an $82 handle… This one continues to be a conundrum to me… the storyline is that the reserve stockpiles are overflowing… I have a difficult time believing that, but be what it may be, I’ll move on here…
In the overnight markets last night… The dollar got sold a little bit more last night, with the BBDXY losing another index point… But as I said above, the currencies still don’t look like they’re ready to get out of their sick beds… The Japanese yen fell to 155 last night before rallying to get out of that psychological figure…. At first, the dollar weakness that showed up in Tuesday night’s (for us) trading, looked to be profit taking, but then yesterday in the U.S. session the selling continued, and now last night it continued too… Seems like a bit more than just profit taking to me, but the selling is so small, that it really confuses me at this point… Could be traders dipping their toes in the water and selling small amounts of dollars to test the water and see if the PPT steps in again to defend the dollar, or it could be just profit taking and it will end soon… I would prefer it to be the former scenario… Because by my calculations the Exchange Stabilization Fund has to run out of funds, sooner or later…
Gold is up $17 in the early trading this morning, and Silver is up 20-cents… So, here we go again, with the metals moving higher each day… I’ve got to question the mental capacity of the metals traders at this point… At this point, If I were a metals trader, I would not attempt to rile the short paper traders… But then that’s just me… The price of Oil remained in the $82 handle overnight, and the 10-year is trading with a 4.59% yield this morning, after rallying yesterday, after someone bought bonds, it will be interesting to see where the bond goes today…
Ok, longtime readers know that I’ve been reporting that there is a shortage of Silver, that the price does not reflect… I began talking about the shortage of Silver way back in my days at EverBank, when Solar Panels began to appear on the horizon, and their need for Silver… The shortage of above ground Silver has continued all these years, and still no price change in Silver… What gives? Well, Ed Steer highlighted an article this morning in his letter: www.edsteergoldsilver.com and I have a snippet of the article here regarding the Silver shortage:
“On Wednesday, the Silver Institute released its annual World Silver Survey, which was conducted by U.K.-based research firm Metals Focus.
Metals Focus noted that industrial demand continues to dominate the silver market and is expected to hit another record high this year, rising 9% to 710.9 million ounces, propelled by the solar sector as silver demand for Photovoltaic (PV) solar panels rises 20% to 232 million ounces
In an interview with Kitco News, Phillip Newman, Director, and Founding Partner at Metals Focus, said that deficits are starting to matter as above-ground stocks continue to get depleted. He added that in a world of continuous deficits, higher prices will be needed before stocks are released into the marketplace.”
Chuck again, yes, I agree, but then I’ve thought that higher prices for Silver would be needed for 20 years now! I always go back to what my dad taught me many years ago… he would say, “Chuck, there’s no such thing as a shortage, the item that appears to be short, is only in need of a price adjustment”… I would repeat that line from my dad many times through the years, and people would do V-8 head slaps and say, “that’s right!”… So, why hasn’t it been right with Silver through the years? The short paper trades have a bug in their pants about a high Silver price… and they won’t allow that to happen as long as they have the ability to short a commodity that isn’t even above ground… Think about that for a minute…
I found this on the FX Street.com site: “The US Dollar Index (DXY) eases on Wednesday as it becomes increasingly clear that markets won the arm-wrestling match with the US Federal Reserve (Fed). The recent upward moves in both US bond yields and the US Dollar were enough to twist the arm of US Fed Chairman Jerome Powell. Powell said on Tuesday that recent data shows a lack of further progress in taming inflation, and that it will take longer before having enough confidence that price growth is coming down to target before considering the first rate cut.”
The folks at FX-Street.com post my letter on their website each day and post a part of it on X (formerly Twitter). So, anytime I can return the favor, I do!
You know that I list the price of Copper in the market prices roundup each day, and that I’ve talked about Copper and its shortage in the markets… Well the Business Insider.com had this on Copper, “The closure of a massive mine operation in the Panamanian jungle is among key reasons for why the world is short on copper, Bloomberg reported.
The metal ore’s spot price has climbed more than 11% so far this year, reaching a high not seen in over a year. It’s a consequence of a widening supply-demand imbalance: as industries race to secure the mineral for green energy projects, miners are rapidly falling behind.”
Ao according to Bloomber.com the only reason Copper is rallying is because of the closed Copper mine in the Panama jungle… It couldn’t be because Copper is being used more and more in industry. Nah… it’s all because of a closed mine in the jungle… Sheesh, I give up! You Can’t beat the Big Boys no matter how much you try! Yes, I agree that some of the gains in Copper could be from the mine closing, but that’s not the whole story!
Yesterday, in Bill Bonner’s letter that can be found here: Jamaican Exception – by Bill Bonner (bonnerprivateresearch.com), and he talked about how Jamaica and Greece had been awful financial countries and looked to be circling the bowl because of Gov’t debt… And then they cut deficit spending, threw out the Gov’t slackers, and began paying off their debt… Reuters reported today that Greece will finally post a positive GDP of 3% this year that beats the rest of the Eurozone’s GDP… See? See what can happen to a country when they decide to cut deficit spending? Sure it takes some time, in Greece’s case it took nearly 20 years… But at least they can breathe now, and not worry about the debt wolf knocking at the door! And yes, these were small countries, for the U.S. to cut deficit spending, it would take a monumental effort to accomplish that… But it could be done… If only the Congress would have some intestinal fortitude and get with the program… the problem there is that’s not the stuff that gets them reelected… See the catch -22 for them?
The U.S. Data Cupboard yesterday, had the Fed Heads’ Beige Book, which showed decent economic growth in all regions, but sticky inflation holding on… No kidding? Really? Hmmm… Today’s Data Cupboard has the usual Weekly Initial Jobless Claims on tap, and the Leading Indicators, which have been negative for 19 months …
To Recap… The dollar’s run to higher ground that began with the PPT’s saving it from disgrace last Friday, finally saw some profit taking yesterday, and its rally came to an end… At least for one day that is… Copper is the main story this morning, and why its rallying so strongly… memo: Don’t ask Bloomberg.com! The IMF sends out a warning to the U.S. on its debt… And what will happen to the dollar in the next administration? Those quiestions and more were answered in the Pfennig this morning!
For What It’s Worth… I had a few articles that could be used and were worthy, but I settle on this one… It’s an article titled: What The Fed Got Wrong on Inflation, and it can be found here: Why Is US Inflation Still High? Blame Powell Pivot, Housing Shortage – Bloomberg
Or, here’s your snippet: “This was supposed to be the year that US inflation rode the last mile down to 2%, letting the Federal Reserve steadily reduce interest rates from a two-decade high. Now those expectations have been dashed.
Price gains have proven much stickier than anticipated a few months into 2024 amid a resilient economy and labor market. On Tuesday, Fed Chair Jerome Powell said persistent inflation means borrowing costs will stay elevated for longer than previously thought, a shift in tone with ramifications for policy around the world.
A persistent shortage of housing is partly to blame, as are rising commodity prices and car insurance premiums. But some also point to Powell himself for prematurely telegraphing interest-rate cuts, which ignited optimism in financial markets and fueled economic activity.
“They just got the inflation picture wrong,” said Stephen Stanley, chief US economist at Santander US Capital Markets LLC. “The mistake they made was they got really enamored with the combination of really strong growth and benign inflation that we saw in the second half of last year.”
Chuck again… Yes, as I’ve said many times now: Inflation is sticky, and it won’t go away when the Fed doesn’t hike rates high enough to wipe it out, ala Volcker… Did they listen? No! Instead to prove me wrong they began talking about rate cuts!
Market Prices 4/18/2024: American Style: A$ .6447, kiwi .5929, C$ .7272, euro 1.0677, sterling 1.2470, Swiss $1.1001, European Style: rand 19.0537, krone 10.9959, SEK 10.8981, forint 368.10, zloty 4.0524, koruna 23.6595, RUB 94.09, yen 154.59, sing 1.3597, HKD 7.8319, INR 83.54, China 7.2380, peso 16.94, BRL 5.2355, BBDXY 1,260.15, Dollar Index 105.87, Oil $82.07, 10-year 4.59%, Silver $28.49, Platinum $938.00, Palladium $1,030.00, Copper $4.43, and Gold… $2,386.19
That’s it for today… I received my 5 frames to choose from Warby Parker, and after I go to the eye doctor this afternoon, I’ll be ordering new glasses! I get excited about stuff like that, because then I wait to see how long it takes for people to notice the change! HA! We’re supposed to be seeing temps drop from current levels of 80 degrees each day… So much for my earlier thoughts this week! I just finished my latest book, and am looking for another one to read… I figured it out the other day that I read about 50 books a year! I guess my wife is right, that I need to just go to the library and get them instead of buying them… That’s on my “to do” list… I’ll be firing up my grills this Saturday, and I grill food for my son, Andrew’s water Polo Tournament… I think I”ll put my new, last year, Blackstone grill to use! OK… Chicago takes us to the finish line today with their song: I’m A Man…. yes, I am and I can’t help but loving you! yeah, that song… I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!
Chuck Butler