Are you ready for the tsunami of bonds that will be issued?

• Currencies & metals rally on Monday.

• What's up with this talk of a rate hike pause? 

Good Day... And a Tom Terrific Tuesday to you! Well, the bad times keep coming for my beloved Cardinals... They lost their 4th straight road game last night... And 4th loss, overall in a row... It's almost maddening to watch them let pop flies drop at their feet, swing at balls 3 feet outside, and so on... I was commiserating with good friend, Dennis Miller, on the phone yesterday, and he said, "Welcome to Cubdom".. He then went on to explain what he had witnessed for years with the Cubs and how they lost games, and it sounded just like what I would say in describing this year's Cardinals team... Thank goodness the Cardinals are in the Central Division, the team is 11 games under .500, but only 7.5 games out of first place! Medicraty has hit the Central Division... Cat Stevens greets me this morning with his song: If You Want To Sing Out.

Well, the week, yesterday morning, got started off with the dollar getting bought in the overnight markets, and it appeared that it was going to be "one of those weeks"... But soon, the dollar started getting sold, and when the dust cleared on the day, the BBDXY had lost 4 index points... The euro finally knocked on the door to the 1.07 handle, and this time it was answered and the euro was allowed to enter the handle... That meant the rest of the little dogs got to get off the porch and chase the dollar down the street.

And Gold & Silver, which were down to start the day yesterday, saw a turnaround too... Gold, which was down $7 early, ended the day up $14.20, and Silver, which was down 26-cents early, ended the day, down just 3-cents... I wish I could tell you that everything about the markets has changed, and that caused the turnaround in the dollar and metals... But I couldn't find one story out there that told a tale of how or why this happened yesterday... It wasn't caused by Data, for the Data Cupboard was empty yesterday, as it is today too.

The price of Oil dropped $2 yesterday, and ended the day trading with a $71 handle... Maybe Oil traders got together and said, "production cut, schoduction cut" And went back to selling Oil... not believing that the Saudi's will be successful in getting other Oil producing countries to follow them with a production cut of their own. And someone must have gotten a call from the Fed Heads, because the yield on the 10-year dropped 5 BPS to end the day trading with a 3.70% yield.

In the overnight markets last night... The traders overnight, have stopped the dollar selling, but they haven't exactly turned the tables and bought dollars... The BBDXY has gained 1 index point overnight, and thus has pushed the euro back below 1.07... The dollar strength looks tenuous at best to me... but then we're talking about Chuck, the guy that has been calling for a long term dollar weakness trend for a couple of years now... I have one job as a stand up comedian, ask me what it is? Timing! as I but in with the answer.... Timing isn't a strong point with me... I'm just saying.

The prices of Gold & Silver are flat to down a itty-bitty bit... 1-cent for Silver... see? itty-bitty... Traders are very confused at this point, which way to go with the asset classes, due to the wishy washy thoughts on the next Fed Heads meeting... Remember, what Chuck always says... If it's the Fed/ Cabal/ Cartel making the decision, it'll be the wrong decision... Just wait-n-see what I'm talking about.

The Saudi announcement of a 1 Million barrel-a-day production cut, stirred the Oil traders for one day, and then it was back to selling Oil, and getting the price back down... The price of Oil lost another buck overnight, and has in the last 24 hours lost $3, to trade this morning with a $70 handle.

And then bonds... are you getting ready for the tsunami of Bond issuance that's going on right now? This from Bloomberg.com this morning: "With a debt ceiling deal freshly signed into law Saturday by President Joe Biden, the U.S. Treasury is about to unleash a tsunami of new bonds to quickly refill its coffers.

This will be yet another drain on dwindling liquidity as bank deposits are raided to pay for it — and Wall Street is warning that markets aren’t ready."

Chuck again, so to answer my question, It looks as though the markets are NOT ready for the tsunami of bonds that will be unleased on them... This could get very interesting folks... Just because the U.S. is issuning these bonds by the truck load, doesn't mean there will be buyers lined up to take them off the hands of the U.S. And that could result in yields rising... So, we had better watch out for that... in other words, keep an eye on the direction of yields in bonds.

The Petrol Currencies, like the Brazilian real, Russian ruble, Norwegian krone, Canadian dollar, etc. get to see their respective currency levels get thrashed about just like the price of Oil does... Up $2, then down $2, rinse and repeat... So, currency traders just don't move these currencies much because they know that the price of Oil is going to move about the country.

And so... there's no basking in the sun for these Petrol Currencies, until an upward destination is a thing the markets can rely on.

So... I've been talking about the de=dollarization going on in the world today, and yesterday, some folks at JPMorgan issued a report that, well I'll let them tell you: "De-dollarization is evident in FX reserves where (the dollar's) share has declined to a record as share in exports declined, but is still emerging in commodities," the strategists said.

JPMorgan's assessment is the most high profile of any large U.S. bank although heavyweight asset managers such as Goldman Sachs Asset Management have also voiced views on the trend."

Chuck again... I thank the good folks at GATA for sending me that info.

Well, will they or won't they? The Fed/ Cabal/ Cartel will meet on June 13 & 14, with a rate announcement on the 14th, and just last week the odds of a rate hike were at 70%, and after today, it's 65%... A couple of Fed Heads came out an talked about the need to pause after hiking rates 10 consecutive meetings... Maybe a pause would be sensible, and then maybe it would be risky.

From what I've read, the Fed/ Cabal / Cartel is showing on their data charts that inflation will rise again later this year... So, while a pause might be sensible to see what's going on with their previous 10 rate hikes, but given that the Fed Heads are seeing that inflation is still rising, it most definetely will be risky to pause... They could fall behind the inflation 8 ball once again, and then the need to catch up would be painful... You know me, and my dislike for the Fed Heads, and their inability to see inflation when it was poking them in the nose, will pick the wrong thing to do, because, well, because they are the Fed Heads, and doing the wrong thing is what they do! 

So, here's where I stand on this.. Inflation is still rising, the latest inflation reports showed a .2% gain last month, to 4.7% in the Fed's favorite inflation meter... And if the Fed Heads are seeing inflation moving higher later this year, why not hike rates now and get out in front of this inflation? Because even though the Fed Heads will come out and say that a pause is not a pivot, and they are prepared to hike rates further later this year, the markets won't hear any of that, they'll prefer to hear that the Fed's rate hikes have ended and their next move in down.

The markets don't like to be fooled, and if they take that wrong stance, then they are setting themselves up for getting fooled... Stupid markets... They just can't get it through their thick heads that inflation isn't going anywhere, and probably going higher... stupid markets.

OK, an update from the BLS and their locking Chuck out of their data... Vanessa at the BLS sent me an email and said that I need to jump through some hoops, and fight through the mess... (she didn't say that, but what she did say meant that!) So, you know me... I'm not going to let someone throwing roadblocks at me, win... But I'm not going to jump through hoops, to get the data... I'll just make up the number of jobs the BLS made up... One made up number deserves another made up number!  So, for the BLS's Jobs created in April, of 339,000, I'm going to say that 178,000 of them were added by the BLS, after receiving the surveys... So, that just leaves 161,000 jobs created in April from the surveys... And therefore the raising of the Jolly Roger to celebrate the BLS Jobs report, was a scam... That's my story and I'm sticking to it!  

When did the Fed/ Cabal/ Cartel become this "rock star" that demands everyone's undivided attention? Before Paul Volcker, one would be hard pressed to name the Fed/ Cabal/ Cartel Chairman... But now, the markets live and breathe on what the Fed Heads are saying... I find it all tedious, and boring... Because they never really tell what's on their feeble minds... I'm just saying. 

Got Gold? Back when I used to travel all over God's Green earth to give presentations and speeches, I used to get asked this question the most: "Are you available?" No wait! C'mon Chuck, get serious here! Ok, they would ask me what they would do with their gold coins once the dollar had collapsed? They couldn't use it to buy a loaf of bread, etc. And then I decided that they needed to convert some of their 1-ounce Gold coins into 1/4 ounce Gold coins, and then use them to buy their loaves of bread... And these smaller coins are easier to store!  So, this is a Public Service Announcement... Use it to your advantage in good health! 

The U.S. Data Cupboard is empty again today... And this week's offerings are null and void... The only data print that will even get noticed si the Consumer Credit (read Debt) for April... I doubt that it will match, March's blow out debt figure of $26.5 Billion, but I would bet you a shiny quarter that it will be at least $20 Billion! That data will print tomorrow... nothing on the docket today.

To recap... The dreariness of the currencies and metals yesterday morning were turned around, and things looked brighter for the currencies and metals at day's end... I think it could have been the news that I talked about later in the letter this morning, and that is the oods of a rate hike in June are falling... Chuck thinks whatever the Fed Heads decide to do, it will end up being the wrong thing to do... It's just that way for the Fed Heads.

For What It's Worth.... Well, since I spent so much time talking about the so-called "pause" this morning, this article on Bloomberg.com, ties it all up with a bow.

Here's your snippet: "The Federal Reserve shouldn’t have led investors to expect a pause in interest-rate hikes in June before officials saw last month’s jobs numbers, says Mohamed El-Erian.

“People are now going to be scratching their head — why did they guide the market so strongly towards a skip ahead of this report and ahead of the next CPI,” the chief economic adviser at Allianz SE and a Bloomberg Opinion columnist told Bloomberg TV on Friday, following a stronger-than-expected May jobs release.

US companies added 339,000 jobs last month after an upwardly revised advance in April, data showed Friday. The unemployment rate rose to 3.7%, while wage growth cooled. It was the fourteenth-straight upside surprise, and the US economy remains a major engine of job creation, which is good news, El-Erian added.

“Thinking that one month of data is going to make a huge difference is, I think, fooling yourself, but they have framed it that way — and it’s a shame,” he added. “We’re all now discussing is it a skip, is it a pause when there’s such bigger issues involved. And that’s the risk of being excessively data-dependent, is that you get stuck in a sort of smaller and smaller corner and the data will pin you there.”

Bond traders have cemented expectations that the Fed will do one more round of policy tightening this cycle, but they still see it as most likely happening in July.

El-Erian added that he worries central-bank officials will push the economy into a recession. For one, they lack a strategic view and a valid monetary framework. Second, they have the wrong inflation target. And three, they are attempting to restore their credibility, he said.

“The risk of yet another policy error, I fear, is quite high,” he said.

“If they are serious about their 2% target, given the data, they should hike,” El-Erian added. “Because they are data-dependent and the data has been hotter than expected.”

Chuck again... So, see? Chuck isn't the only person that believes the Fed is making a mistake, and he thinks that because, it IS The Fed/ Cabal/ Cartel making the decision... 

Market prices 6/6/2023: American Style: A$ .6656, kiwi .6078, C$ .7446, euro 1.0690, sterling 1.2421, Swiss $1.1011, European Style: rand 19.2208, krone 11.1020, SEK 10.8557, forint 344.87, zloty 4.1983, koruna 22.0662, RUB 81.18, yen 139.57, sing 1.3472, HKD 7.8414, INR 82.59, China 7.1185, peso 17.45, BRL 4.9285, BBDXY 1,241.19, Dollar Index 104.16, Oil $70.53, 10-year 3.67%, Silver $23.65, Platinum $1,050.00, Palladium $1,427.00, Copper $3.76, and Gold... $1,963.70.

That's it for today.... Well, I start my new round of chemo today... 3weeks on 1 week off... I really liked it last week not having to take any chemo... But like all things... All things come to an end... We had an enjoyable ride home from NW Arkansas on Sunday... Good thing we left as early as we did, for the lake traffic of people going home from the lakes in SW Missouri, was really picking up as we went along... I always truly enjoy driving through Missouri, it's so scenic, and has hills, bluffs, and other places that catch your attention... And since I wasn't driving, I was able to really enjoy the state... It did feel a bit strange, riding shotgun in MY car! But Grace gets car sick if she isn't driving, so I yielded the driving of MY car to her! I heard from Delta Airlines about our ordeal on Friday... I wonder what they will do? Probably nothing... Oh well I hit a nail with them when I tagged them in a Tweet that wasn't very nice... Dire Straits take us to the finish line today with their song: Sultans of Swing... I hope you have a Tom Terrific Tuesday, and please, oh please, Be Good To Yourself!