Yellen Said What? No Way, She Said That? Oh, Yes She Did!

Rocktober 30, 2023

* Metals end the week, on a high note! 

* Russian Central Bank defends the ruble… 

Good Day… And a Marvelous Monday to you! Well, our time with nice weather in the fall, has ended… Colder weather is here to stay, and I don’t like it one iota! I had to sell my tickets to the playoff game last night, because of the forecast, that came true… Cold and rain… I had just gotten over one bug, I didn’t need to be putting myself in harms way, with my non-existent immune system, that is…  Well, my adopted NFL team, The Chiefs, finally lost to Denver after 16 tries by Denver to beat the Chiefs… My good friend, Rick, is a Broncos fan, so he was happy! Blackfoot greets me this morning with his rock classic song: Highway Song… 
Well, on Friday, last week, the news spread that the Israeli ground forces had entered Gaza, and that news alone got Gold traders all lathered up, and the buying of Gold went into a frenzy, with Gold gaining more than $20 on the day, and climbing back above $2,000….  Gold ended the week at $2,006.60, up $21 on the day, while Silver was up 32-cents and ended the week at $23.19…  Both metals were higher in the day’s trading, but guess who showed up for dinner? 
The dollar drifted into the weekend, 2 index points covering both Thursday and Friday, it ended the week at 1,275… The data last week was some good, some bad, so you can understand why the dollar bugs were a bit confused as to which way they wanted to go, up or down… So, they drifted… The Israeli news that moved Gold last week, also moved the price of Oil higher, and it ended the week with an $85 handle.  While something got into the bond traders late last week, as it appears that they have pulled the plug on their rates higher and longer thought… The U.S. Treasury’s 10-year’s yield ended the week at 4.87%… Recall that last week the 10-year’s yield had bumped higher than 5%…   We’ll have to watch this to see if the bond boys have given up the ghost all together, or if this was just a fly in the ointment… 
In the overnight markets last night…. Well the dollar drifted some more, downward, that is… The BBDXY is down 2 index points overnight, and so we start the week with the dollar getting sold… Gold is either seeing some profit taking or short paper trading as it is down $13 to start the day/ week. Silver if down just 2-cents to start the day/ week. The word this morning is that the Israeli defense has spread out in Gaza… That should be manna from heaven news to Gold, but apparently not this morning… UGH!  The price of Oil lost another buck overnight and starts the week with an $84 handle…  The 10-year saw its yield rise 2 basis points to 4.89% overnight…  The FOMC meets this week, so there’s a lot on the table for bonds, metals and the dollar this week, it will be interesting to see how it all falls out, eh?  
Ok… Well, it seems that we, as a country, have decided to fund more backing for Ukraine, and Israel… I must have been out back enjoying the warm weather last week, because I don’t recall anyone showing up at my door to ask me if I favored that or not, not even a phone call either!  In fact, in a recent poll that was done, the majority of those that were polled were NOT in favor of sending one more dollar to Ukraine…  You know… if I were king… I would require any spending bill to be voted on by the people… It’s their tax dollars at use, they should have a say in how we spend their money! 
The reason this additional deficit spending is a big deal, is that the U.S. was already set to issue tons of new Treasuries that needed to be bought, and now you can just go ahead and add some more bonds to that issuance… That China, Russia, India, and Iran have all balked at buying any new issuance of Treasuries, should lead to higher rates on bonds once again, due to bond traders needing to make them attractive to buy… 
And eventually, it will all weight heavily on the dollar, folks… And you can take that statement to the bank! 
Did you hear that twit/ dimwit/ knucklehead, Yellen, say that she didn’t believe that the Gov’t’s spending caused inflation?  She also said, ““I don’t think that these investments will drive up inflation at all,” she told CNBC’s Sara Eisen…   Do you recall what was the feel the day, the music died?  No wait, do you recall back in May, when she told us that she had failed to anticipate how long high inflation would continue to plague American consumers and that:

“I think I was wrong then about the path that inflation would take,”   
So, she was wrong about the how inflation would get, and that it wouldn’t last long, and now she wants us to believe that their deficit spending didn’t help usher in inflation?  GIVE ME A BREAK! SERENTIY NOW! 
I guess, she also wasn’t aware that the Bank funding was working overtime, keeping Banks liquid?  This from “With usage of The Fed’s emergency funding facility rising once again to a new record high last week – and banks stocks clubbed like a baby seal – all eyes are once again on just what The Fed can do to ‘seasonally-adjust’ the data to avoid the admission of any deposit run fears in domestic banks.

Total bank deposits – on a seasonally adjusted basis – crashed by a massive $83.7BN last week (the biggest outflows since SVB) to the lowest since June…”
And just last week, the independent accountants reported that estimated runnable money-like financial liabilities increased 3.4 percent to $20.3 trillion (75 percent of nominal GDP) over the past year.” 
That’s $20.3 Trillion with a capital T…   that’ll put some fear in banks… 
You may recall me telling you last week that Bank deposits were dropping like flies as clients were moving their funds to money markets that can pay higher yields… Looks like the Fed’s emergency funding facility will be working overtime from here on out… That’s just more shenanigans that the Gov’t plays to keep you from getting concerned about what ‘s really going on…  
Ok, let’s move on to something else…   But wait! There’s more?   I hear you saying, But Chuck, why just money markets, and not bonds at such high yields?  Well… if you followed bonds you would know that: “The 10-Year Treasury bond is down 5% this year, on pace for its 3rd consecutive annual decline. With data going back to 1928, that’s never happened before. The worst 3-year period for bonds prior to now was 1978-1980 with a 3% loss for the 10-Year. What’s the 2021-23 cumulative decline? -26%.” – from Bill Bonner’s private newsletter… 
Who’s to say there won’t be more losses in bonds going forward, because inflation isn’t going away, contrary to what the Gov’t wants you to believe, and deficit spending isn’t going to stop, so more issuance of bonds is going to come down the pike, and then we’re right back to what I described above… Tons of issues, no buyers, and a need to raise yields to make them more attactive…  Need I say more? 
I for one wouldn’t be removing my shorts in Treasury’s right now… That is, if I had one! 
The Bank of Japan is scheduled to meet this week… One wonders when the BOJ will scrap their negative rates policy? Well, I know one thing, at least I think I know, that it won’t be at this week’s meeting… I don’t see the BOJ lifting interest rates the rest of this year…  And any tweaking of the yield curve, remember, Japan has yield curve control, will give the markets the willies, and you could see yen fall to multi-decade lows once again this week. I’ve said it before, and I’ll say it again… Japan is a basket case… 
The U.S. Data Cupboard this week is chock-full-o-data, but it’s all crammed into later this week… There’s nothing on the docket today to print, and tomorrow we’ll just see the employment cost index (ECI). The Big Dominant item on the docket this week is a FOMC Meeting on Wednesday… Yes, it’s rate decision time once again… I’ of the opinion that the Fed Heads will leave rates unchanged… the reason I’m of that opinion, is that every other Central Bank around the world (ex Russia) has left their rates unchanged…. and 2… I truly believe that the knuckleheads, I mean Fed Heads truly believe they have beaten inflation… But if they did hike rates it would be cryin’ time again, you’re gonna hurt me, I see that faraway look in your eyes….  Ahhh, a little Dean Martin early this morning! 
On a sidenote, the Russian Central Bank hiked rates last week 2oo Basis Points (2%), to 15%, in an effort to defend the ruble… The ruble reacted positively, and trades this morning with a 90 handle, recall it wasn’t that long ago that the ruble had tumbled past 100! 
One piece of data last week that didn’t go the Fed Heads way, was the PCE… Personal Consumption Expenditures… This is their preferred inflation calculator, and it rose .4% in Sept, faster than anyone expected it to rise… The annual PCE was 3.4%…   now that’s not inflation as we know it to be, but it’s a factor since consumption is equal to 70% of GDP…   So, there’s that… 
To recap… Gold had a moon shot on Friday, up $21 to end the week… It was much higher during the day on Friday, but was brought back down by the short paper traders…  The dollar drifted going into the weekend… And I think if the Fed Heads leave rates unchanged again, that the dollar will come under some pressure… I’m just saying…
For What It’s Worth… I know that I’ve explained to you that I know Peter Schiff, and that we used to exchange pleasantries, and while I agree with some of his thoughts, I don’t always agree with how he presents them, it’s just not my style, not to say that his is wrong…. Any way… That’s what I have for you today, is a missive from Peter Shiff on the today’s financial crisis and it can be found here: Peter Schiff: This Is The Most Obvious Financial Crisis That Nobody Sees Coming | ZeroHedge
Or, here’s your snippet: “The mainstream continues to insist that the economy is fine. Inflation is beat. A soft landing is in play. But in his podcast, Peter Schiff said we’re in the early stages of a financial crisis. It should be obvious, but very few people see it coming.

Peter emphasized that we are already in the midst of a financial crisis.
Now, this is, of course, the early stages of that financial crisis. It is unfolding before your eyes if you’re awake or smart enough to recognize what you see. But it is going to get a lot worse.”
Peter said that at some point, people are going to recognize that we’re in a financial crisis, but they’re not going to realize why.
They’re all going to be just as blindsided by this financial crisis as they were by the much smaller financial crisis in 2008 that also took them by complete surprise.”
During the 2008 meltdown, the mainstream described it as a “100-year flood” — a “black swan” that nobody could have foreseen.
Which of course was a bunch of BS, because a number of people, myself included, not only saw it in advance, but spent years warning about it.”
Peter said the evolution of this crisis is just as clear.
This is the most obvious financial crisis that nobody sees coming. I mean, this isn’t even a black swan. This isn’t even a white swan. This is like a pigeon. They’re everywhere. This is a very common bird that is not coming out of left field. It’s right there. But Wall Street has a big vested interest in ignoring this. And so do a lot of people on Main Street, so does academia, the financial media, the government. Nobody wants to acknowledge this until of course it already happens. Then they have to figure out who the scapegoat is.”
One thing is pretty certain. Nobody will blame the party most responsible – the government.
They never look back and reflect on the government’s role in creating the crisis. No, no, no! They’re too busy pointing fingers at somebody in the private sector and holding out government as the salvation. ‘We just need more government! If we only had more regulations, then this wouldn’t have happened.’ No. It happened because we had too many regulations. What we need is free market regulations.”

Government regulations sabotage the free-market regulations that actually do work.”

Chuck again… yes, I keep telling you that this is all leading to a financial system collapse but thought that if you heard it from someone else, you might be asking yourself if you have enough Gold…. Got Gold?
Market Prices 10/30/2023: American Style: A$ .6373, kiwi .5833, C$ .7229, euro 1.0586, sterling 1.2132, Swiss $1.1060, European Style: rand 18.8005, krone 11.1330, SEK 11.1413, forint 361.32, zloty 4.2087, koruna 23.2080, RUB 90.08, yen 149.73, sing 1.3662, HKD 7.8212, INR 83.24, China, 7.3166, peso 18.03, BRL 5.0143, BBDXY 1,273.17, Dollar Index 106.45, Oil $84.35, 10-year 4.89%, Silver $23.17, Platinum $922.00, Palladium $1,141.00, Copper $3.65, and Gold… $1,993.30
That’s it for today… I tried to watch the City Team’s game last night, but it went too late for me, and besides they were losing badly… They lost the first game of their best of 3 set with Sporting KC last night 4-1… UGH!  Next game is in KC… Our new team came in 1st place in the Western Conf. this year, quite an achievement for an expansion team! Our house is in the home stretch for getting repaired from our “flood”… Well, the news I couldn’t tell you last week, I can tell you this week, and that is my son Alex and his beautiful partner, Grace, are engaged to be married! Now the fun begins for those two… HA!  We, (Kathy & Chuck) will be christening our new house with an engagement party for the two of them in December!  Diamondbacks & Rangers are tied 1-1 in the World Series that continues tonight… The Killers takes us to the finish line today with their song: Somebody Told Me….  I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler