The ECB Kicks The Can To Next Month…

A Pfennig For Your Thoughts
 
June 9, 2022
 
* dollars, metals, bonds, cryptos, everything gets sold… 
* Russian rubles is the winner, winner, chicken dinner! 
 
Good Day… And a Tub Thumpin’ Thursday to you! My beloved Cardinals have run into a road block in Tampa the last two days, with the final game a day game today… I have gotten a kick out of seeing all that red in stands in Tampa, representing Cardinals fans… The Cardinals used to have spring training in St. Pete, for 57 years they were there… I took my family to the old Al Lang Stadium next to the marina when the Cardinals were in St. Pete a couple of times… And it appeared that there were tons of Cardinals fans still in the St. Pete region! The Rays are called the Tampa Bay Rays, but their stadium is in St. Pete! Those were fun times on St. Pete Beach back in the day for the Butler family! The Marshall Tucker Band greets me this morning with their song: Searchin’ For A Rainbow…
 
Well, my “day off” yesterday, from writing, first took me to the hospital to visit my oncologist… Then I went to buy a new TV, for the living room. Brought it back home, and then it took me a couple of hours to get it up and running, connected the WiFi and so on… I’ve said this before, but here goes… I’m not your last choice for a tech person! My oncologist is very happy with me… I’m losing weight, albeit slowly, (that’s her preference), my blood work is good, my blood sugar is good, right now… But as I told her yesterday, “the wolf is always at the door”…
 
So… while I was out yesterday, the dollar bumped along and is closed the day up 1 index point from where it was on Tuesday at 1,235… The euro climbed back above 1.07, and one would have thought after the glowing revue from UBS regarding the Aussie dollar (A$), and then following that up with a 50 Basis Points (1/2%) rate hike from the Reserve Bank of Australia (RBA), that the A$ would be kicking tail and taking names later, but that’s not the way things work any longer, folks… Besides… Their 50 Basis Points rate hike only brought their internal rate to .85%…
 
Gold was hammered all day yesterday, and ended the day down $1.00 to close at $1,853.10, while Silver couldn’t find a bid all day either and ended the day down 18-cents, to close at $22.35… I was reading the Daily Reckoning yesterday, and something that Jim Rickards said, caught my eye… Rickards said, that “Gold is so cheap right now, it’s practically a steal.”… Rickards goes on to explain his reasons for that thought, and if you’re interested in his thoughts on Gold, you can click here: The Real Reason Why Gold Has Stumbled – The Daily Reckoning 
 
The real mover since Tuesday has been the price of Oil, which closed yesterday at $122 and change… There are calls now that economists are seeing the price of Oil rise to $150… by the end of summer! WOW! Now that would certainly cause a disruption in the supply chain, as Truckers will have to feel as though they have to cut back or go broke! Quite Frankly, I can’t believe they’re not there already! Oh, U.S. Gov’t, can’t you hear me knocking, on your door? (Rolling Stones) But I’m not going to go on a rant about all that again this morning… I’m feeling pretty darn good this morning, and nothing is going to make me mad… Ahem, Chuck, you forgot about… Oh, never mind!
 
In the overnight Markets last night… The dollar slipped a bit, losing one index point in the BBDXY… There was some profit taking in the price of Oil, and the precious metals are getting sold out of the starter’s gate again this morning. The 10-year Treasury is steady Eddie at 3.04%, and the cryptocurrencies are looking for a bid. Everything is looking weak this morning… Gold is down $8 in the early trading, and Silver has lost the $22 handle once again… 
 
The Russian ruble is on the move again, and in the last 24 hours it has been the best performing currency. The ruble trades this morning with a 57 handle! WOW! Now that’s a move! Like I said before, the ruble is an “Oil play”, and depending on your outlook for Oil… My outlook is for the price of Oil to remain high and go higher… I’m just saying… 
 
The European Central Bank (ECB) is meeting right now, while my fat fingers are going to town on the keyboard, you should see them flying around! The ECB has been like the Fed/ Cabal/ Cartel, was in that that they continue to drag their feet in the face of soaring inflation… But that has to stop today, and I’m thinking that the ECB will buck up and hike rates out of the negative territory today… We, might find out by the time I finish so, if we do, I’ll let you know…
 
You might recall me writing a week or so ago, about how economists and analysts had agreed to say that the ECB would be hiking rates soon, and that’s what lit the fire under the euro to rise from the near dead, to the 1.07 level… Now, if the ECB disappoints today… Uh-Oh…
 
The Reserve Bank of New Zealand (RBNZ) announced yesterday that they are going to begin to sell the NZGB’s they bought in the last couple of years… This was BIG NEWS, because the Fed Heads have decided to allow their bonds to mature and not roll them over, but not to sell them, like the RBNZ is going to do… It helps that the RBNZ wasn’t in as deep dookie with regards to debt as the Fed Heads…
 
And Doug Casey threw this cat among the pigeons, saying that “Woke Companies will go Broke”…
 
I personally hope he’s right, especially the zombie companies, that are already broke, but are being kept alive by the Fed Heads… Let ‘em all die, and hopefully what starts up in their place, is a good strong company that takes its revenues, pays dividends, pays its employees, and puts the rest into capital improvements… Notice, I didn’t say make stock buy backs!
 
Getting back to currencies… The Japanese yen slid further weaker VS the dollar yesterday, ending the day trading with a 134 handle… Well, this is what I expected a long time ago, but somehow the yen kept plugging along, until finally, the Bank of Japan (BOJ) couldn’t plug any more holes, the dam began to leak… And now the BOJ is pleading with the major Countries to hold a coordinated intervention to stem the selling of the yen… So far, there have been no takers to their pleas…
 
For What it’s Worth… I saw this article and thought, now here’s a FWIW article if there ever was one! This is about how high earners are feeling pinched these days, and it can be found here: Advice for High Earners With Student Loans 2022 – Bloomberg
 
Or, here’s your snippet: “How much does it take to feel flush in the US these days? Not even $250,000 a year will get you there, according to a recent survey by Pymnts.com and LendingClub Corp., which found that 36% of those earning at least that amount say they’re living paycheck to paycheck.
 
Considering $250,000 is almost four times the median US salary and puts you in the top 5% of earners, it’s pretty unnerving that so many say they are spending everything they make each month. (And this was a census-balanced survey; they didn’t just ask people in high-cost areas such as New York and San Francisco.)
 
It’s even more disconcerting when you realize that most in that category haven’t had to make student loan payments for more than two years. Almost everyone has been taking advantage of the moratorium on federal student loans, which allows borrowers to press the pause button on payments without any interest accruing.
 
Student loan debt is a big deal for many in this crowd. More than 32% of total federal student loan debt is held by households with incomes from about $107,000 to $374,000, the largest percentage of any income group, according to the Education Data Initiative. The average amount of student debt within that group is $45,965 — also the highest for any income bracket.
 
For those with professional or doctorate degrees, which are common among top earners, the debt burden is often much higher. Student loans for MBAs total more than $66,000, while law school is more than $145,000 and medical school is north of $201,000. Assuming even just the average of $82,800 in total student debt for a graduate school borrower means monthly payments of about $950 a month have been on hold for almost 30 months.
 
When those payments will start coming due again is anyone’s guess. The Biden administration extended the moratorium in April until Aug. 31. The president is reportedly considering canceling up to $10,000 of debt per borrower, but potentially limiting it to those who earn less than $150,000 (or $300,000 for married couples).
 
It’s unlikely that those earning $250,000 or more will see any substantial forgiveness, which means their budgets are going to become even more stretched. According to the Pymnts.com survey, more than 12% of those earning at least $250,000 say not only are they living paycheck to paycheck, but they’re unable to pay some of their bills.”
 
Chuck again… remember back in the days of the height of the pandemic, and the Gov’t decided that they were going to give passes to: Students, renters, home owners, and instead of requiring them to send in checks, the Gov’t sent them checks? I said then that it was a bad precedent to start, and that proved to be bang on, considering that two more checks were sent out, and people still haven’t had to make payments!
 
This just in… The ECB announced that they are not moving rates this month, but expect to lift off in July, and will begin to taper their bond holdings this month… Now, that’s a tricky way to disappoint the markets, but leave them wanting… Not now, but later, dear…  Well, at least they didn’t leave the euro hanging on a line… I’ll give them that… But in reality, they have delayed their response to the soaring inflation in the Eurozone, and if I were a citizen there, I would not be happy! 
 
Market Prices 6/9/2022: American Style: A$ .7171, kiwi .6445, C$ .7959, euro 1.0727, sterling 1.2542, Swiss $1.0227, European Style: rand 15.2708, krone 9.4791, SEK 9.7914, forint 369.00, zloty 4.2788, koruna 23.0059, RUB 57.94, yen 132.85, sing 1.3755, HKD 7.8484, INR 77.76, China 6.6770, peso 19.56, BRL 4.8853, BBDXY 1,234.26, Dollar Index 102.26, Oil $121.97, 10-year 3.04%, Silver $21.93, Platinum $988.00, Palladium $1,942.00, Copper 4.35, and Gold… $1,845.35
 
That’s it for today, except to send along GREAT BIG HAPPY BIRTHDAY GREETINGS to one of my fave people in the world, Laura Baur! Happy Birthday Laura Lou! On Sunday, Chuck & Kathy will celebrate our 46th year of marriage… I know I’ve told you this before, but for me… it was love at first sight all those years ago, when I was running on the track, and first spotted her performing cheers… OK.. I’m hoping that our kids will use our marriage as a template for theirs! And I’m now 15 years into having been diagnosed with Stage 4 Metastatic renal cell carcinoma! Next week on the 14th will be the anniversary of my first caner surgery… I remember the day, that my good friend, Doc. Jeff Atkins, came to my door to tell me that I had cancer… I said to him then, “I’m going to beat this thing”… Well, I haven’t beaten it yet, but so far I’m winning! And that’s that! It was sad news the other day to learn that Jim Seals, of Seals & Crofts had died, and so with him in mind, Seals & Crofts takes us to the finish line today with their song: Diamond Girl… I hope you have a Tub Thumpin’ Thursday today, and please remember to Be Good To Yourself!
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts