Why Are Traders So Giddy About The FOMC Meeting Tomorrow?

December 14, 2021

* The dollar is bought throughout Monday’s session

* Gold AND Silver rally on Monday… 

Good Day… And a Tom Terrific Tuesday to you! Well… Besides NFL football, there was little else in the way of sports for me to watch last night, so I did some research and reading instead…  Kathy was gone for the evening, and I was alone, all by myself once again, so I rang Mr. Pizza Man Pizza for my dinner! Hey, it wasn’t all bad for me, I had a salad with my pizza! Besides the right kind of pizza, has all the food groups, so to me, it’s healthy! HA! Well, today is the day I see what those spots that won’t heal are on my head… I’ve been told by my doctor that he believes its cancer, and given my history with that awful dreadful disease, I’m pretty sure he’s correct, but… I’ll find out for sure today… Chris Botti greets me this morning with his version of the song: O Little Town of Bethlehem… 

Ok, so yesterday, I forgot to mention that on Wednesday this week we’ll get the FOMC meeting results, and from I saw going on in the currency markets yesterday, traders must be darn tootin’ ready for a rate hike from the Fed/ Cabal/ Cartel, to happen NOW!  Because…. The dollar was bought by the bushelful yesterday, with the DDBXY moving upward to 1,184 and change… from 1.180 it ended the week on last Friday…  I think yesterday I might have conveyed the BBDXY price from Friday incorrectly at 1,182.01, when it was really 1,180.48…   UGH! 

So, the dollar got bought yesterday, but so did Gold AND Silver! These two metals didn’t get bought with the vigor that was being used to buy the dollar, but they got bought, and that’s all that matters to me! Of course, who knows, what the daily upward moves could be if not for price manipulation?

Gold closed up $4.00 on Monday to close at $1,787.90, and Silver closed up 13-cents to close at $22.41…  you know how I keep repeating the thought that the Central Banks around the world keep buying physical Gold, and not Bitcoin?  Well… There’s something else to think about, a meltdown of the electric grid, could cause some major problems for Bitcoin, but would the same meltdown cause major problems to Gold?  No… so I say, Got Gold? 

In the overnight markets last night…  We started off the overnight session with the dollar getting bought, but as the night went on, I figure calmer, smarter heads decided that owning dollars right now is not the smart thing to do… It was either that, or they finally got around to reading the Pfennig! I mean, I did call dollar traders out yesterday, calling them twits, dolts, knuckleheads, pick one and I’m sure I used it! 

Gold & Silver are both down a bit in the early trading today, with Gold down $2.40 and Silver down 16-cents…  Not much of to have to overcome to get these two back in the green… 

Tomorrow, the FOMC will meet… Oh boy! We’ll get to hear the chairman, Jerome Powell, say that inflation is no longer transitory, but instead, persistent… And that the members of the Fed / Cabal/ Cartel have voted to step up the pace of the tapering so that they get to rate hikes faster… of course there is still no explanation as to who is going to pick up the slack of their lack of bond buying each month… And to me, that’s the biggest worry about their Tapering…  And one of the reasons I truly feel that they will reverse course on Tapering before they reach the end…

I can’t see the Fed/ Cabal/ Cartel saying or doing anything different than I’ve just described… And if Powell proves me wrong, it will be the first time! And the last time!  And if/ when I’m proven to be correct about what Powell will say, I’ll then want to know what all the dollar buying was about On Monday…  Opposites… I have to keep those in mind, for in today’s trading opposites are usually the thing that is behind market movements…

 So what if the Fed/ cabal/ Cartel actually gives a date they think they’ll make their first rate hike in years….  It’ll only be 25 Basis Points, 1/4% , for all you non-money people out that don’t know there are 100 Basis points in 1%…   Ok, now that we’ve established that, if the FOMC hiked rates tomorrow, it would mean that the 10-year Treasury’s real yields was still negative by 5.05%…  I shake my head at these twits that keep buying Treasuries and losing money… Oooohhh, can I have another please?  NOT!

But in reality, the FOMC is not even close to being ready to hike rates, and so we’ll just have to suffer with the rising inflation the best we can… I can already feel the pain that will come on when I pull into the gas station this morning, and fill my gas tank… UGH!  Everything, and I mean everything costs more, and it’s beyond being barely noticeable the rising costs of everything you can think of, is taking a HUGE chunk out of our disposable income, folks… And it will continue to do so unabated to the quarterback! Wait, no, I mean to say unabated for the near future… 

Because… even if the Fed/ Cabal/ Cartel speeds up their tapering, it won’t be until late next spring before they finish, and like I keep saying, I’m of the opinion that the Fed/ Cabal/ Cartel will reverse their tapering before they reach the end…  That’s my story, and I’m sticking to it! 

This came to me yesterday in the form of Dave Gonigam’s 5 Minute Forecast, in which he pointed out that tweet from the PM telling people that India had adopted bitcoin was false…. And then had this to say, “Somebody briefly hacked the Twitter account of India’s Prime Minister Narendra Modi — long enough to declare the Indian government had acquired 500 Bitcoin and would distribute them to the people.

It seemed credible at the outset because of the way El Salvador’s President Nayib Bukele has embraced Bitcoin as — among other things — an official currency alongside the U.S. dollar.

But no. Indeed, “The latest hack comes as India prepares to crack down on a booming cryptocurrency trade,” reports the BBC, “with a new law likely to be put before parliament this month.”

Chuck again…  This social media stuff is really getting on my nerves, folks…  Stephen Pastis summed it up for us in his Pearls Before Swine article on Sunday, when he drew a doctor asking rat why he feels so bad these days, and after a ton of questions he asks this: “Hey wild guess here but do happen to have a device on you that has turned all 7 Billion people on earth into full time critics, made us feel inadequate, and constantly exposed us to all the world’s worst news?”

Pearls Before Swine is my fave cartoon… 

Ok… So, today we will be entertained by the Small Business Index, which last month still was printing high, even in face of the “great resignation”… But then this is a government issued report, so you can put as many grains of salt in it that you wish… Me? I’m taking grains of salt out! We’ll also see the November print of PPI (Wholesale inflation)… Talk about things being out of whack, with the way they used to be… PPI used to always print before CPI… which makes sense given that Wholesale Inflation will filter into Consumer Inflation…  But these days, they print them in opposite order, and it’s probably just to get me all riled up about fundamentals, and order…

To recap… The dollar was bought Sunday night, and all through Monday’s U.S. session, and then in the overnight markets it was bought some more, before turning around and ending the overnight session down…  Dollar traders were all giddy about the FOMC meeting tomorrow, where they believe that Jerome Powell, will make some mention of a rate hike… Just the mention of a rate hike, will get these guys all giddy, like school girls, and I just have one question to ask them… How much of a rate hike do you see coming, if and when it does come?  Gold AND Silver both gained yesterday, but is getting sold in the early morning trading today… And Chuck points out the silliness of social media…

For What It’s Worth….  I had this article sent to me by long time reader Bob, and it points out the same things I’ve been pointing out regarding the dilemma the Fed/ Cabal/ Cartel are in with regards to rising inflation and them needing to hike rates… And it can be found here: U.S. Consumer Survey Expectations of Inflation at Least Doubling Wage Gains – Middle Class Storm Building – The Last Refuge (theconservativetreehouse.com)

Or, here’s your snippet: “The New York Federal Reserve survey reflects the obvious.  Consumers see staple food and energy price increases far outpacing any wage gains, and the outlook moving forward does not show signs of improvement.

The distance between the inflation line and the wage line is the intensity of the hurricane coming our way.

We are in this very weird place where the politically motivated Fed cannot stop purchasing debt created by legislative spending.  At the same time, the political Fed is going to have to raise interest rates or we will enter an impossible spiral of policy caused inflation.  There are three options:  (1) stop buying debt; (2) increase interest rates; or (3) deploy some COVID mechanism to shut down people and hit the demand side.

Considering that Omicron didn’t work, and further panic pushing does not seem politically viable, that only leaves the two options of the Fed stops buying debt, and/or the Fed raises interest rates. Now, considering that these same political ideologues will not stop pushing the Build Back Better legislative agenda, that means the Fed cannot stop buying debt.  That leaves one option remaining, increase interest rates.”

Chuck again…  I wouldn’t put it past the government to create another fear factor and shut things down again, but, I don’t think the people of this country will be the sheeple this time… I’m just thinking out loud here…  But the dilemma is real for the Fed/ Cabal/ Cartel, but they made their bed, and now they must lay in it!

Market Prices 12/14/2021: American Style: AS .7124,  kiwi .6760,  C$ .7806, euro 1.1315, sterling 1.3237, Swiss $1.0875, European Style: rand 16.0435, krone 9.0602, SEK 9.0724,  forint 323.70,  zloty 4.0961,  koruna 22.4224, RUB 73.41, yen 113.56, sing .13676, HKD 7.8027, INR 75.79, China 6.3631, peso 21.06, BRL 5.6330,  BBDXY 1,183.20, Dollar Index 96.19,  Oil $71.16, 10-year 1.43%, Silver $22.25, Platinum $937.00, Palladium $1,776.00 Copper 4.30, and Gold… $1,785.50

That’s it for today… thanks to Ty Keough, who read the Pfennig yesterday, and saw that I was scratching my bald head hoping to come up with a present for Kathy, and sent me a link to use… for all you other guys out there that in the same boat as me on this, try this website: Abbykeough.com…   I hope I don’t get in trouble with her for doing that… Just drumming up business!  Ty is a good friend of mine, we’re about the same age, he’s younger, by a year or two, and he too had a very bad year last year health wise, but is all better now, and looking marvelous I tell you! (in my be Ricardo monteblan voice)  So hard times did make him stronger!  Dennis sent me another funny yesterday that I’ll share with you here:  If Liar, liar pants on Fire really catch fire, watching the evening news would be a lot more fun! And isn’t that the truth! Jack Jezzro has me swinging in my seat this morning as his trio plays their version of the song: Favorite Things, this comes from their album titled Bossa Nova Christmas!  I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler