U.S. GDP Slips Right Back to 2%…

A Pfennig For Your Thoughts

November 1, 2021

* Currencies & metals get sold on Friday… 
* There are no more freely traded markets! 

Good Day… And a Marvelous Monday to you! And welcome to November… And congrats to my beloved Missouri Tigers, who found a way to win a game, despite their awful defense… I watched the game with good friends, Rick, Duane, & Mike… A good time was had by all… Little Evie spent the night with us Saturday night, she’s 2 now, and becoming a little girl… She has her own ideas of what she wants and doesn’t want, and let’s you know! Waking up with the sound of little feet running across the room is the stuff I live for… To watch my grandkids grow up, now that’s fun stuff! OK… The Allman Brothers greet me this morning with their song: One Way Out… 

I’m full of you know what and vinegar this morning, because of the brazen manipulation that went on last Friday… When I left you on Wednesday, the dollar was getting sold by small margins, and Gold was moving higher… And then on Thursday, 3rd QTR GDP printed and showed that we went straight back to 2% growth… And the dollar got sold quickly down the river, with the BBDXY falling from Wednesday’s 1,155 to 1, 152 The euro was climbing higher toward 1.17, And Gold was up on the day but was capped at 1,799 at the close… There was no sign whatsoever that traders were going to reverse this dollar selling, and it appeared that the great dollar sell off was under way…

Not so fast there Tim! Friday’s data was awful… Personal Spending didn’t meat the expectations, and Personal Income was down 1.0% for September… See what happens when there were no more stimmy checks? GDP falls like a rock, and so does Personal income… And one would have thought that given the bad data on Thursday, followed up by bad data on Friday, that the great dollar sell off would be well into its second day… But… That didn’t happen…

The Exchange Stabilization Fund, got a workout, and the dollar, was bought by some organization and ended the day up more than 7 points in the BBDXY at 1,160… That’s crazy folks! One day it appears that dollar selling is what it’s all about, and the next day, that’s all wiped out and now dollar buying appears to be what it’s all about… Tell me, so that I don’t go down the wrong road here, but did that look / appear to be dollar manipulation once again? Why can’t markets just trade freely, without input from the Government?  The currencies aren’t the only assets to show losses on Friday… Gold was down $14.80 to close the week at $1,785.30, and Silver dropped back below $24, with its 16-cent loss on Friday to close the week at $23.99

This is becoming to strange for even me to talk about these days, folks… The manipulation goes on in every market, and I just don’t know what else to say about that… Bonds have been getting bought by the bushelful and that makes no sense to me… Who among you want to lock in 1.5% yield for ten years? I sure don’t, because I know that eventually, the markets will come back to reality, and yields will rise… But if you locked in your 10-year Treasury at 1.50%, rising yields won’t help you because your bond will have lost major points, and you’ll have to take a loss to move to a new higher yielding bond… I digress here, so let me get back on target…

Bonds are being manipulated to keep the yields down… The Government needs inflation folks, and they will attempt to keep rates low to induce higher inflation. Whether you want it or not… And in most cases you won’t want higher inflation, because that’s just like a hidden tax on your disposable income…

Why does the Gov’t need higher inflation? Well, I’ve gone through this before, but for those of you not paying attention in class that day, or for any new classmates, here goes… The debt in this country has gone to, in the words of Buzz Lightyear, “Infinity and Beyond”…. With no ability to reduce the debt or pay it off, the only choice left to the Gov’t and Central Bank is to “inflate or die”…

And that circles back to why they are manipulating the dollar to keep it from falling off a cliff… The Gov’t and Central Bank will allow the dollar to lose ground, which invites inflation into an economy, as long as it moves slowly, and Thursday’s drop in the dollar, appeared to be too fast for their liking and so they stepped in to make sure that fast drop didn’t continue…

I do want to circle back again here and talk about GDP… For the previous 10 years to 2021, the U.S. averaged 2.1% GDP… And now that there has been no new Gov’t spending in the last quarter, GDP slips right back to 2% growth… But don’t worry about that, folks, because the great white knight, Janet Yellen, U.S. Treasury Sec. told the markets yesterday not to worry, because the U.S. economy is going to come roaring back… She didn’t offer up any reasons why the U.S. economy will come roaring back, because she didn’t have any, but she wasn’t going to let that get in the way of a market boosting statement! TSK, TSK, TSK…. memo to Janet Yellen: Didn’t your mother teach you not to lie?

So… in the overnight markets last night… The dollar buying ended, but there was no dollar selling and the BBDXY is still at 1,160… Gold is up $5.50 in the early trading, and Silver has climbed back over $24 with a 2-cent gain this morning… Now the dollar appears to be in an overbought position, but that’s never stopped the dollar buying before, so just keep that in mind as the day goes on… 

Last week, the Russian ruble had moved to a 69 handle for the first time in a couple of months of Sundays, and appeared to be on everyone’s radar… But then along came a spider, and on Friday the ruble was sold along with all the other currencies, and ended the week at 70.90… Quite a move for one day in a currency that’s not heavily traded, like the euro or franc or yen, etc.   I did see where Lola has decided that investors should be buying the ruble… And we all know that what Lola wants, Lola gets… For all of you new to class, Lola is my name for Goldman Sachs… This probably means that Lola has taken a position in rubles, and now needs for everyone that listens to Lola to buy rubles, which is fine with me… Full disclosure here… I own rubles…

Also last week early in the week, the reports were that the Oil supplies were running very low, which pushed the price of Oil higher, but… by the end of the week the reports said that the Oil supplies had been recovering… and that took the price of Oil back down… But it’s still high, at $83… Like I said last week its hard to believe that in the spring of 2020, the price of Oil went negative for a day, and now it’s heading toward $100 once again… But C’mon, how can supplies go from near empty to full in a matter of a day or two? Another market that is manipulated… UGH!

Energy plays are what a lot of traders are saying is the way to combat higher inflation, and not so much the hard commodities, like Gold, Copper, Silver, etc. I find that difficult to comprehend, as to me, commodities are commodities, and they should all be moving higher to offset the pain of higher inflation… I’m just saying…

The Aussie dollar (A$) moved above 75-cents last week, and has been one of the best performing currencies of the past couple of months… Rubles and renminbi were the king of the hill until last Friday. Yes, the Chinese renminbi saw a weakening of the currency’s value on Friday, going from 6.38 on Wednesday to end the week at 6.40… Kiwi too is still basking in their rate hike news, and that’s a good sign that fundamentals still have some say in a currency’s value… Not much, but some, as trader sentiment has taken over as the key to a currency’s value… And the Swiss franc, old steady Eddie, remains well bid, and has really been a guiding light for the other currencies… 

So have you heard about what’s going on in Venezuela? The people there tired of all the debasements and changes to their currency have gone to shaving Gold bars to spend on essentials like food. They use the Gold instead of their currency, the bolivar, which has seen some major changes to its value… The Venezuelan government recently lopped off six zeros from its hyperinflating currency, the bolivar. The highest denomination currency note of 1 million bolivars, worth less than $.25, was replaced by a one-bolivar note. At the same time, a 100-bolivar note, worth about $25.00, was introduced as the new highest denomination of the bolivar. The currency conversion was designed to spare the government the embarrassment of having to issue a 100-million bolivar note to enable people to purchases everyday items without having to carry around bundles of notes, given that the price of a loaf of bread had risen to 7 million old bolivars…   

So, many folks over the years have said to me, “Chuck why Gold, we won’t be able to use a 1 ounce Gold Coin to buy a loaf of bread, so why own Gold?” To which I would say, “people have always found a way to use Gold as money, and they will continue to do so”, and now the Venezuelans have proved my point!

The U.S. Data Cupboard doesn’t have much for us to start the week, but by Wednesday, when the ADP Employment report for Rocktober prints, and then on Friday the Jobs Jamboree will fill the void of the early week. You may recall the September Jobs report was not the stuff that economies that are roaring back are made of… And so, it will be interesting to see what the BLS has in store for us with the Jobs Jamboree on Friday this week… My spider sense is tingling and I’m thinking that the BLS will have added a ton of jobs to the surveys so that they can line up the jobs numbers with Janet Yellen’s little lie… Lies, lies, everywhere are lies…  

To recap… The markets are so full of manipulation, that it just ticks me off to no end… And I don’t know if I can stand it anymore… But to recap the action on Friday, is nothing but manipulation… The dollar which was on the verge of being sold to no end, saw buying on Friday, out of nowhere, and Gold got sold, and Oil got sold, but bonds got bought… What gives? Only the shadow knows, folks, and that’s all I’m going to say about that, today…

For What it’s Worth… well, this article came to me via Ed Steer’s Saturday letter… And it talks about how the ECB President isn’t ready to hike rates despite soaring inflation… I guess she gets her cues from the Fed/ Cabal/ Cartel… but anyway this article can be found here: ECB’s Lagarde seeks to cool rate hike predictions for next year (cnbc.com)

Or, here’s your snippet:” European Central Bank President Christine Lagarde on Thursday tried to play down the chances of a rate hike for 2022, hinting that market players might be getting ahead of themselves with their predictions.

The euro zone’s central bank decided to keep interest rates and its monetary policy stance unchanged despite ongoing inflationary pressures.

Some market participants believe the ECB is underestimating current inflationary pressures and will therefore likely have to announce a rate hike before the start of 2023. Indeed, money markets have priced in the probability of a 20-basis point hike for December 2022.

But Lagarde remained resolute at her news conference Thursday.

“Our analysis certainly does not support that the conditions of our forward guidance are satisfied at the time of liftoff as expected by markets, nor anytime soon thereafter,” she told CNBC’s Annette Weisbach.

“We really looked and very deeply tested our analysis of the drivers of inflation, and we are confident that our anticipation and our analysis is actually correct.”

She later added that it wasn’t for her to say whether markets were wrong with their predictions.”

Chuck again… well, like I said above, I guess she gets her cues from the Fed/ Cabal/ Cartel, and they are nowhere near ready to admit they were wrong about inflation, nor or they ready to hike rates… Again, where’s Wim Duisenberg, when the ECB needs him most? And she’s only getting the Eurozone in deeper dookie here folks… if the euro remains weaker, than it invites even more inflation into the Eurozone economy, and then she’ll be behind the inflation 8-ball… No wonder the euro fell out of bed after this announcement, and then with all the dollar buying, it make the euro’s value fall even more! 

Market Prices 11/1/2021: American style: A$ .7515, kiwi .7189, C$ .8080, euro 1.1575, sterling 1.3674, Swiss $1.0952, European Style: rand 15.3150, krone 8.4134, SEK 8.5688, forint 310.80, zloty 3.9895, koruna 22.1315, RUB 70.88, yen 114.29, sing 1.3489, HKD 7.7826, INR 74.92, China 6.4047, peso 20.65, BRL 5.6338, BBDXY 1,160.69, Dollar Index 94.07, Oil $84.23, 10-year 1.57%, Silver $24.01, Platinum $1,028.00, Palladium $2,088.00, Copper $4.47, and Gold… $1,790.80

That’s it for today,,, I was really hoping that the Braves could close out the World Series at home last night, but that was not to be… I brought the fire pit out front last night, and had a roaring fire, thanks to neighbor Paul, for our warmth throughout the night, as Trick or Treaters came by… It’s sad to say but I didn’t hear one joke that was worth a hill of beans… Yes it was slim pickin’s on the jokes last night, but we still had a great night sitting out by the fire pit… In fact, we went pretty late last night, for a school night, and so I’m dragging the line a bit this morning, even though I said at the top I was full of you know what and vinegar today… So, like I said at the intro today, Little Evie spent the night with us Saturday night, and on Sunday morning, Kathy was busy cooking for all the guests what would be here that day, so it was up to me to entertain Evie, and I did my best, we had a great morning together, of which she’ll never remember the fun we had! But I will…  Kansas takes us to the finish line this morning with their song: Play That Game Tonight… There was a time in the 70’s when I thought that the band Kansas was the greatest… I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

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A Pfennig For Your Thoughts