What Will CPI Have Up Its Sleeve Today?

February 10, 2022

* The dollar weakens in the overnight trading… 

* What’s up with the Senate not confirming Powell? 

Good Day… And a Tub Thumpin’ Thursday to one and all! Yesh! Yesterday was a complete washout as far as getting outside was concerned… It was one of those days where you say, “we have to experience these to better enjoy the nice days” … I went to dinner last night with some friends, and it was yummy, as usual… The restaurant was packed to the gills, with people waiting outside for a table… When the place first opened, I would go there and be one of the few that ate dinner there, but now… It has become a very popular pace, so good for them! What’s up with our government supplying the crack pipes for people? Is this not an example of how weird this country had gone?  Oh well, nothing I can do about that, so I’ll move on… Kansas greets me this morning with their song: Dust In The Wind…  I have a long story about that song, that I’ll go over in before we end today’s letter, so you have that going for you!

Well, Wednesday was much like Tuesday, in that it had the dollar getting sold, with the currencies and metals rallying against that dollar weakness. I’m actually surprised that the dollar hasn’t lost more ground than it has recently, given the things stacked up against a strong dollar…  But it is what it is, and I carry on despite my wanting to complain about it!

So, the BBDXY which began the day at 1,173.11, ended the day at 1,173.97… As it appeared to be a dollar mini rally in the dollar index, but that was not reflected in the values of the currencies yesterday.  Gold gained $7.50 to close at $1,834.20, and Silver gained $12 cents to close at $23.38…  The price of Oil gained for the first time this week, and trades last night with an $89 handle, while Treasuries remained stuck in the mud…

There was some news from the Treasury Auction yesterday…. News that surprised me… It was reported that $37 Billion of 10-year Treasury Notes were auctioned, and, according to Bloomberg.com, “In a sign of big demand, the securities drew a yield of 1.904%, below the 1.926% level that they were trading at in the so-called when-issued market just before the auction. Not only that, but investors submitted bids for 2.68 times the amount offered, a level exceeded only two other times for that maturity going back to early 2017.”

Ok, so buyers lined up to buy the 10-year at 1.90%.  They must truly believe that interest rates are not going to be higher in the years to come, otherwise why would they make such a long-term commitment? They must also believe that going forward, that this is the highest the yield will be, and that they got a bargain…  I, personally, wouldn’t touch a 10-year Treasury at 1.90% yield, with YOUR ten-foot pole…  But then that’s me, and I see things differently than most folks…

In the overnight markets last night… the dollar slipped a little and the BBDXY is starting the day t 1,173.41… Gold is down 50-cents, and Silver is up 7-cents in the early trading today… No big shakes, and levels that can be wiped out easily… Especially when the CPI print gets published this morning…  The price of Oil has bumped higher again and trades this morning with a $90 handle…  And the 10-year’s yield is still stuck in the mud at 1.93%… 

Well, today is the day, the markets have been waiting so anxiously for… The day when the stupid CPI for January will print… I’ve told you time and time again, just how stupid the CPI (Consumer inflation) is with all of its hedonic adjustments, and today it will be displayed, just how stupid this report is, in all its glory, when it says that January consumer inflation is up 7.3% from a year ago… That’s preposterous! And I can’t believe the BLS is still allowed to print such garbage! But they do, and we all know that the markets can’t get enough of it! So, the markets are all in on this report, even though, as I’ve shown you earlier this week, consumer inflation is probably up 30%, in the goods that we use and buy every day…  And… I’m not complaining about this, just merely pointing out the discrepancies…

In 2010, then Fed Gov. Thomas Hoenig, President of the Kanas City Fed, was the lone dissenting vote against ZIRP and Quantitative Easing…  (it’s too bad that it took 10 years to find this information out!) Then Fed Chairman, Ben Bernanke, didn’t look kindly at this dissenting vote, but it was just one negative vote, and both programs to “save the U.S. economy” were hatched…  Have you ever wondered what things would be like today, if say, more of the members of the FOMC voted no at that meeting?

The problem I had with QE and still have with it, is that the U.S. economy, while dragging its feet, was not in need to stimulus… But yet we put the future of our citizens at risk to see if we could get the economy stronger…  Longtime readers will have to go back into the memory logs to confirm what I’m saying, but I was against QE from the beginning, for I knew then, that it was merely currency printing to buy bonds, and that one day all that currency in the economy would cause inflation…

For, did QE make our lives better? no…  Did ZIRP help seniors and savers? not in any imaginable way!  And did it bring on a new identity to the Fed, that being the knight on the white horse to the stock market? Well, yes, it did! And that’s where the Fed’s newfound guilty conscience to do something about inflation, is going to become a real dilemma for the FOMC members… I believe it’s time to reinvent the Fed… This needs to be done folks… They need new marching orders, and scrap the ones from the deep state/ elitists that they’ve been following for the last 20 years… 

We need to do more than just audit the Fed, as Ron Paul has called for, we need to change the marching orders of the Fed…  1. They need not worry about the value of the stock market, 2. They need to solely focus on providing a stable currency, one without inflation…  3. No bond buying, no currency printing without a vote of the people. 

Now THAT would be a Central Bank that I could get my arms around!

Ok, before I get accused of being a big cry baby, complainer… I’ll move on to something else…

Oh, and this is something to watch… the Senate has not confirmed Jerome Powell to his new term as Fed/ Cabal/ Cartel chairman… Right now, he’s going to carry on with the title Chair pro tempore…  Seems the Senate does not like the 3 new folks that are vying for Fed jobs… This is all a tempest in a teacup folks, but still interesting to watch! 

Debasing a currency…  do you all know what that means?  You see, a currency is the stock of a country… The country’s fundamentals will dictate how the stock performs…  And interest rates, or yield on the stock, is a very important item when valuing a currency.  So, when a country’s Central Bank decides to cut interest rates, they are taking away a very important item used to value the currency, thus they are debasing the currency… There are other ways to debase a currency, like increasing the money supply… Which our Fed/ Cabal/ Cartel has down pat… 

So, as India, New Zealand, Brazil, the U.K., and other countries have moved off of ZIRP and hiked rates, they are adding to their currency’s value…  One-time years ago, I wrote about an upcoming Central Bank meeting in Norway, and forecast that they Norges Bank would hike rates, and that folks looking to get into Norwegian krone, would do well to buy before the meeting…  This info was picked up by a writer at the Wall Street Journal, by the name of Jeff Opdyke, who quoted me in the WSJ, and then followed up a month later to show his readers that the Norwegian krone had indeed gained value VS the dollar since the rate hike.

We’ve been in a world of ZIRP (zero interest rate policy) for so long now, all across the globe, except in Russia, that those days of picking out upcoming Central Bank meetings, have gone to the wayside… But… now that we have several countries around the world, looking to hike rates again, it could very well be making a comeback!

The U.S. Data Cupboard today finally has the January print of the stupid CPI, which should show that consumer inflation increased by 7.3% VS last year…  Chuck doesn’t give much credence to the BLS’s version of CPI and prefers to us the inflation numbers that John Williams gives us on his www.shadowstats.com web site.  With it being A Tub Thumpin’ Thursday, our usual Thursday fare of weekly Initial Jobless Claims will print for last week… This data has reflected a weekly rise in the Claims, so it will be interesting to see if that trend remains…

To recap… The currencies & metals rallied a bit yesterday… Volumes in the metals were low, and Gold was able to gain $7.50, while Silver gained 12-cents on the day… The 10-year Treasury Auction was oversubscribed, which was a surprise to Chuck, and the price of Oil wrapped a tourniquet around its recent slippage and gained for the first time this week.  And Chuck talks about debasing a currency, something you won’t want to have missed!  HA!

Before we head to the Big Finish today, I promised you above the story about Dust In The Wind…  My wife and I and two good friends were in Cancun in 1999, and we happened upon a street musician playing his guitar, and he had a sound system with a microphone. He started playing the song Dust In the Wind, and me being the ex-musician and someone that loved the attention, I grabbed the microphone and started singing the words to Dust In The wind… When the song was finished, a large crowd had gathered and began clapping and whooping it up… I’ll always remember that as my last stage appearance! HA!

For What It’s Worth… Well, I’ll leave you this week with an article I found on Bloomberg.com that’s about why now is probably not the right time to buy a house, and it can be found here: The Housing Bubble May Be About to Burst – Bloomberg

Or, here’s your snippet: “As we all know, millennials are America’s most economically cursed generation. Now that they’re hitting their 30s and 40s, they’re not even cool anymore. And the housing market might be about to stick it to them once again.

As we recently wrote, millennials are finally buying houses after years of being sidelined by such catastrophes as the dot-com bust, Sept. 11, two long wars, the financial crisis and its jobless recovery, a pandemic, and the endless musical career of Chris Brown. In its foolish haste to analyze, this newsletter suggested this could be a way for millennials to wreak a bit of economic vengeance on the world by helping push home prices even further past the moon.

But what if it’s actually just another trap for the broke generation? Americans think this is the worst time ever to buy a house, according to a recent poll. Gary Shilling has many, many charts and numbers validating that sentiment. Interest rates are rising, and housing affordability is approaching rock-bottom.

One silver lining is that home builders are starting to ramp up supply. Oops, it turns out that silver lining is actually a sharpened katana dropping on the neck of anybody buying a house right now, with all this new supply hitting just as soaring costs crush demand. That’s not to mention the rising odds of a Fed-induced recession, which would be the third one of those since the millennium began.

Oh, and if you buy a house in the ’burbs, you’ll need a car, unfortunately. Best of luck ever getting a bargain on one of those again.”

Chuck again…  Man, am I glad I’m finished buying houses… And that my kids seem to be finished buying them too, at least I would hope if they aren’t, that they wait until this next housing boom bubble bursts!

Market Prices 2/10/2022: American Style: A$ .7201,  kiwi .6701, C$ .7895, euro 1.1432, sterling 1.3571, Swiss $1.0816, European Style: rand 15.1134, krone 8.8113, SEK 9.1954,  forint 309.41,  zloty 3.9250,  koruna 21.3189, RUB 74.57, yen 115.82, sing 1.3413, HKD 7.7929, INR 75.05, China 6.3580, peso 20.41, BRL 5.2317,  BBDXY 1,173.41, Dollar Index 95.54,  Oil $90.54, 10-year 1.93%, Silver $23.45, Platinum $1,040.00, Palladium $2,404.00, Copper $4.61, and Gold.. $1,833.70

That’s it for today, and this week…  Well, Sunday is Super Bowl Sunday, and there will be parties and gatherings at bars, etc. to watch the Big Game that this year pits the Rams VS Bengals…  And the game is at the Rams’ home field, just by luck of the draw… no conspiracy here… Our Blues get back on the ice tonight VS the NJ Devils… And tomorrow night the Billikens play St. Bonaventure, and once again the game will be on ESPN+, so I won’t be able to watch it! UGH! It’s been a week, and Tom Brady is still retired! HA! Well, the warmup begins here today, so I’ll get to get back outside again… And Kathy will return on Saturday, so I’ve only got 2 more days of messing up the stove! I kid here, folks, because I cleaned the stove yesterday, and it’s spotless!  Next week is a 3-day holiday weekend, and for me it will be 4-dayer! YAHOO! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow! Please Be Good To Yourself.. And don’t forget to Be Positive, Test Negative!

Chuck Butler