Back to the real problems for the US

• Currencies & metals gain a bit on Wednesday.

• Chicago PMI is in shambles.

Good Day... And a Tub Thumpin' Thursday to one and all! And Welcome to June! Well, my wife dragged me out yesterday, and took me patio furniture shopping... I can tell you one thing; we did our best to help out with the Retail Sales for May! She's been saying for over a year now that we needed new Patio furniture for down here in Florida... So, I finally succumbed and said, let's do it! And in the end, we did quite well, getting exactly what we wanted, at a decent price! The last Ted Lasso aired last night... Now I'll have to find another show that entertained me as much as that show did for 3 years!  

Pfennig Tradition calls for me to sing this song: June is busting out all over,  All over the meadow and the hill.

Buds're bustin' outa bushes, And the rompin' river pushes, Ev'ry little wheel that wheels beside the mill... Spell check does not like Rogers and Hammerstein's words! 

There's something on my mind this morning, that I have to talk about before I talk about markets., economies, and the dolts that run them... I read yesterday that 3 Marines in California, were attacked by a group of derelicts... What is wrong with these youngsters in this country? Have they grown up with no manors, no decorum, no ability to tell right from wrong? Judging from what I read in that article the answer to those questions is a rounding YES!, they have no manors, they have no decorum, and they have no ability to tell right from wrong... I shake my head in disgust at these kids, and think, one day, they'll be running this country... Now that's a scary thought.

OK... well, this is later this morning, because I had an awful night... The new chemo that I take, has done the job, and the tumor is gone again, but... what's left is not fun to deal with, and I was up most of the night dealing with it... So, that's my excuse, and I'm not changing it! HA!

The dollar got sold by a small amount yesterday, it was down by 4 index points at one point of the day, and looking like it could lose more, and then it didn't... The dollar buts fought back and the the dollar only lost 2 index points in the BBDXY to end the day... The euro was attempting to climb back to the 1.07 handle, but fell short, after the dollar bugs rescued the dollar from further damage... Just to show you how ridiculous these markets are these days, take the case of the Aussie dollar and kiwi... Australia has lagged New Zealand with regards to rate hikes, and appears to be close to their end of a rate cycle, while New Zealand is still hiking rates higher, and have the highest rates in the industrialized world, but guess who gets more love? The A$... stranger than fiction, and another line of proof that fundamentals no longer rule currencies and their respective values.

Gold gained $3.10 yesterday, to end the day at $1,962.40... Silver had a good day, gaining 33-cents to end the day at $23.49... Slowly gaining back the losses that were handed to the metals last week... You know, slow and steady, is a good way to rally, as it doesn't ruffle feathers with the short paper traders... I'm just saying.

The price of Oil bumped higher by a buck and ended the day yesterday, trading with a $68 handle... And Bonds didn't move, so the buying and selling had abated yesterday, and leaving the 10-year at 3.65%.

In the overnight markets last night... The dollar got sold a little more, with it losing 2 more index points in the BBDXY... The euro is still knocking on the door to 1.07 but falling short at this point of the day. Bonds are steady Eddie, and Oil is range trading to start the day.

Yesterday, the Chicago PMI, the regional pulse on Manufacturing, printed... And that's the nicest thing I can say about the report... This from zerohedge.com this morning: "After the unexpected resurgence in April, Chicago PMI plunged in May from 48.6 to 40.4 (against expectations of 47.3). That is the ninth straight month below 50 (in contraction).

That is the longest streak of prints in 'contraction' since the Great Financial Crisis."

Chuck again... since the Great Financial Crisis... Let that sink in, because if we get a couple more reports like the one in May, we'll be looking at a situation that's "worse than the Great Financial Crisis" I have the great mind of Doug Casey in the FWIW section today, talking about how we are heading to "worse than the Great Financial Crisis", so you won't want to have missed that! Stay tuned, don't change that dial! 

Well, don't you feel great? I mean this was the day that the dark clouds were to move over the U.S. and Armagedón was supposed to be all around us, because this was the first "x" day that Treasury Sec. Janet Yellen told us that all bad things would happen if we didn't have a debt escalator agreement in place. I called her bluff on that, and eventually she came around and said the new "x" day would be June 5...  All lies and more lies... But that's our Gov't...  The US Senate is set to take up a bill to lift the government's $31.4 trillion debt ceiling, with just four days left to pass the measure and send it to the POYUS to sign... All Kabuki theater, and bad drama will come to an end... And we can get back to the real problems for the U.S. economy.

You know, problems like... Who's going to buy all the Treasuries that will be issued once the debt escalator agreement is signed?  Russia, China, India, and even Japan have balked at taking on any more Treasuries, and in fact have sold a ton of them previously... Sounds to me like the U.S. is going to have buy their own bonds, monetize them if you will, and print the currency to pay for them, and then we get right back to where this all started... But, hey! Inflate or die... I would think the Fed Heads and Gov't would choose to inflate... So... Got Gold? 

I don't have much else to talk about today...  I'm dragging the line this morning, and I think it shows up in the letter whenever I'm like this.

The U.S. Data Cupboard today has the ADP Employment Report, U.S. Productivity, the ISM Manufacturing Index, and the usual Thursday fare of Weekly Initial Jobless Claims... I think that all of these reports will be damaging to the dollar, but then I think logically, and not trader sentiment.

To recap... The dollar got sold by a small amount yesterday, and then repeated in the overnight markets to start the day today down 4 index points from where it was yesterday morning.. The first "x" data is here... Seems like everything is working... I sure called Yellen's bluff on that "x" data, didn't I? You bet I did! She's a Gov't hack, and bad one at that! Gold gained $3 yesterday, and Chuck noted that he likes slow and steady.

Here's your snippet:" Everyone knows that the US government is bankrupt and has been for many years.

Whenever the chattering classes talk about cuts, it’s only about cuts over the course of 10 years. Which is a dodge, a fraud. Partly because most of the supposed cuts will be scheduled for the end of the period, but also because new programs, new emergencies and hidden contingencies are guaranteed to creep in, offsetting any announced cuts. The anticipated $2 trillion deficit for 2024 isn’t a temporary worst case: it’s the rosiest possible scenario.

People thought I was joking when asked how bad the Greater Depression was going to be, I answered that it would be worse than even I thought it would be. But I haven’t been joking.

To sum up the situation, given its financial condition and the political forces working to worsen it, the US government is facing a completely impossible and irremediable situation.

The problems we face are one hundred percent caused by the US government – not by bankers or brokers, although they have been complicit.

Recall what government is: an organization with a monopoly of force within a certain geographical area. Its purpose is, ostensibly, to protect the inhabitants of its bailiwick from the initiation of force. That implies three functions: an army to protect against aggressors coming from outside of its borders, police to protect citizens from aggressors inside its borders and a court system to allow citizens to adjudicate disputes without resorting to force.

Assuming you’re going to have a government, it’s important to limit it strictly, lest it get completely out of control – it’s got a monopoly of force, after all – and overwhelm the society it’s supposed to protect."

Chuck again... A pretty long article that really describes the mess we're in, and where we are going, I hope I captured the best part for the snippet, but you should hit the link above and read the entire article... A warning though, put away the sharp objects before reading.

Market Prices 6/1/2023: American Style: A$ .6512, kiwi .6010, C$ .7374, euro 1.0691, sterling 1.2457, Swiss $1.0984, European Style: rand 19.7764, krone 11.1848, SEK 10.9017, forint 346.44, zloty 4.2498, koruna 22.1686, RUB 81.14, yen 139.71, sing 1.3529, HKD 7.8320, INR 82.57, China 7.1122, peso 17.61, BRL 5.0413, BBDXY 1,245.20, Dollar Index 104.18, Oil $68.24, 10-year 3.65%, Silver $23.54, Platinum $1,009.00, Palladium $1,404.00, Copper $3.70, and Gold... $1,961.50.

That's it for today... Well, I have some grilling to do today... Oldest son, Andrew, has his Water Polo team down here to play in a tournament and they will visit us today, and I will grilling hamburgers for 10 teenage boys... I think that will require a lot of time at the grill! I remember when I was a teenager, and driving a teammate home, we came across a church that was having a picnic, and they were selling 5 hamburgers for a $1!  Well, my teammate and I proceeded to eat 5 hamburgers each! The sun is out today... hopefully that will remain throughout the day for the boys to enjoy the ocean... The O'Jays take us to the finish line today with their great song: Back Stabbers... What they do? HA! I hope you have a Tub Thumpin' Thursday today, and a Fantastico Friday tomorrow, and will remember to Be Good To Yourself!