The honker tests the peg

• Currencies & metals end last week in rally mode.

• A huge investment fund is limiting withdrawals... Uh-Oh! 

Good Day… And a Marvelous Monday to you! And welcome to December… One of my fave months even if it is colder than… well it’s cold. The U.S. lost their 2nd round game to the Netherlands on Saturday… Too many opportunities wasted, but… The U.S. was the youngest team in the tournament, which means most of these players will be back in 4 years… The team played with a lot of heart and gumption in my opinion, but in the end it was their youth that did them in… I grew up in S. St. Louis, where everyone played soccer, and I was ok at the sport, but I liked football, baseball and basketball much better. Oliver Jones playing is piano greets me this morning with his version of the song: Have yourself A Merry Little Christmas.

I want to thank each and every dear reader that sent me a note last week, after I was unable to answer the bell last week… I’ve had pneumonia a couple of times in the past, and this was very close to being just that. I was sent to the basement to rest, and rest I did, sleeping Wednesday, and Thursday all day, only waking up a couple of times each day and night. I just can’t shake this cough, and it drives me crazy… But it’s only been 1 week now, so another week and I should be good to go!

It never fails that I get some kind of cold, this time of year…I used to be the Santa at my kids’ school, and after having all those kids on my lap each year, I would come down with something. I haven’t played Santa for many years now, but I still come down with something this time each year. I think it’s my body telling me that it doesn’t want to be here where it’s cold… HA!

Well, the dollar sure doesn’t look as strong as it did at the beginning of November that’s for sure… The dollar’s gain was over 10%, but now sits at 5.66% this year, and by the time this month is over, it might not even show a gain! The BBDXY dropped over 22 index points as the week went on last week. The euro has climbed back above the 1.05 figure and sterling trades with a 1.23 handle this morning. The Aussie an kiwi dollars are both looking very perky, a5 68 and 64-cents respectively… So, hold on to your currencies for now, because the dollar is in trouble.

Gold gained $34 on Thursday last week, and Silver gained 56-cents, and then on Friday Gold gave back $5.70, but Silver continued to gain adding another 34-cents on Friday. Gold had made it to above $1,800 on Thursday, but settled for a figure of $1,798 on Friday. Silver closed the week at $23.20… A nice week for the two metals that most of you own.

And if you don’t, well… What can I say? Like I said last week, you can lead a horse to water, but, you can’t make it drink the water. I know, I know, it’s been a difficult year for Gold, with all the rate hikes by the Fed Heads, but that’s all about to change… Gold’s next line of resistance is $1,850, if Gold can settle above that figure, then it’s Kay Bar The Door! There’ll be no looking back, full steam ahead, and all that and more.. .Of course that’s my opinion, and I could end up being wrong.

The OPEC members met this past weekend, and kept their lower production levels the same… That kept the price of Oil steady with an $80 handle. And Bonds are on a roll… Having been the worst bond market in over 20 years so far this year, that all changed in the last 10 days, and buyers have been flocking to the 10-year Treasury Bond, who’s yield has dropped to 3.53% It’s still a far cry from the low of 5/6ths, last year… But still better than when it was trading over 4.20%, a month or so ago.

There are still some people out there in La-La land thinking the Fed Heads are going to pivot… and reverse their rate hikes to save the stock market, and bonds… I just don’t see how they can think that any longer, especially after Fed Chairman, Powell, made it perfectly clear that this was not the time to pivot… Well, I learned early on in life that “you can believe what you want to believe, as long you don’t expect me to believe it” You know, You take the high road and I’ll take the low road, and I’ll get to Scotland before you!

In the overnight markets last night: The dollar started off the evening session getting sold, and the BBDXY was down 5 index points, but as the night went along, the dollar rallied, and we start today with it being flat as a pancake (Head East) with its Friday close of 1,256… There was some drifting downward of the currencies though, and they don’t look so perky this morning. Gold starts the week down $4… The best performer overnight is the Chinese renminbi… Wait, What? Yes, the BIG NEWS overnight is that China has actually pivoted on the zero covid stance, and Asia and the rest of the world is jumping with joy. The renminbi is trading this morning with a 6 handle, for the first time in month of Sundays. And like I explained many years ago, if the renminbi is in rally mode, so too is the Singapore dollar.

The price of Oil is up a buck this morning, and trades with an $81 handle, and bonds keep getting bought… You know it occurred to me over the weekend that a lot of this buying of the 10-year Treasury could actually be safe haven buying… People are scared right now, and when they are scared they flock to Gold, Swiss francs, and Treasuries… To me I find it embarrassing to see that people are just now getting scared… This mess has been building a long time now, it just didn’t become a mess overnight. I guess I didn’t yell at the walls loud enough! My bad.

There’s so much that’s going on I’ll never get to all of it today… But I’ll try!  First of all have you heard about this? The latest to be hit with a surge in investor demand for their money back is the Blackstone Real Estate Income Trust (BREIT). Unlike most REITs, BREIT doesn’t trade on a stock exchange. Investors have to ask the trust to buy back their shares when they want their cash back.

According to an announcement posted at the Blackstone website, it has begun to limit withdrawals. In November, investors only received 43 percent of the withdrawals they requested.”

The folks at Wall Street On Parade told me that news, and I thought, “Oh-no!” The fallout from the FTX collapse is starting to spread around the markets… And now there’s another Crypto exchange having problems… Genesis had a large sum of money at FTX, and now that’s lost, their liquidity is drying up fast.

OK.. or did you hear about this: “TD Securities announced Thursday that it was stopped out of its tactical short silver position. The bank said it is booking a 14% loss after "an epic positioning squeeze contributed to a +25% rally from the October lows."

TD Securities was short silver as it expected that rising U.S. interest rates combined with the growing threat of a recessio n would significantly weigh on the precious metal.” From the good folks at GATA…

Chuck again… I can’t tell you how happy I was to hear this news, that a short paper holder got stopped out of their short position and had to take a loss… It reminded me of my old margin days, and having to close out accounts to cover the investor’s short position. I wonder if they learned their lesson , TD securities that is… I doubt it.. but there won’t be any levels to stop at going higher for Silver to give them any idea that Silver’s rally is over.

Or, did you hear that the Brics countries have developed their own card / payment system that will alleviate the use the dollar when using it? This is HUGE folks… I’ve been pointing out how the BRICS have come together and joined their countries like a European Union, but seeing the problems with the European Union that way it was organized, will allow the BRICS to do it better, and they’re on the right path… They have the most people, they have the biggest treasure chests of reserves, the have the most Gold, and pretty soon, they’ll be a tough row to hoe, for the dollar to compete with.

In the U.S. Data Cupboard last week we had two differing reports on labor… First on Thursday, the Continuing Jobs Claims exploded higher in November… And then on Friday we had a larger than expected jobs created number… So, what is it? Oh, I know… call on me, Mr. Kotter, Call on me! You see, when these people lose their jobs, and sign up for unemployment, they are very picky about the kind of job they want… They were told in college that they would be the President of a large Company, or the leader of a strong Union, or a Bond Trader on Wall Street, or a barrister… But you’re not going to be a barista!

And I don’t blame you… But C’mon, President of a large Company already? 

BTW, I borrowed that line about the barrister and barista from Joel Bowman.

One more thing that's going on that needs to be addressed and that is the trading in the Hong Kong Dollar (HKD) or the honker as traders used to refer to it. The honker has really pushed the envelope on its peg to the dollar recently, and trades this morning at the far end of the peg's band, and looks like traders will test the peg soon... Each day in the past month, the honker is a little bit stronger, and to me that's traders testing the water, to see how far they can take the honker without being slammed by the Monetary Authority... So far... so good...  We'll have to keep an eye on the honker for signs it will be forced to drop the peg... Very interesting indeed! 

Last week’s Data Cupboard also told us the Manufacturing in the U.S. is now contracting… The ISM (manufacturing index) fell below the 50 level at 49 in November, falling from 50.2… You may recall me telling last month that the number had been sliding in recent months reports, and that I fully expected it to fall below 50 in the next report… And it did, it did, I did see a putty tat!

There’s not much in this week’s Data Cupboard, so with little on the docket, the dollar is on its own this week, with no trumped up, goosed, and massaged reports to help it.

To recap… The dollar selling last week was harsh, and the BBDXY lost 22 index points to end the week. The dollar’s gain this year has dropped from over 10% to 5.66%, and Chuck thinks that by year end the dollar’s gain will be hanging on for dear life. Continuing Claim explode higher, at the same time so does job creation… something is awry there… The BRICS are coming out with a payment system to compete with the dollar.. all in all it’s just another Brick in the wall! TD Securities got stopped out of their short Silver paper trade, and Chuck is happy as a he can be about that news! 

For What It’s Worth… Ok, since I brought it up this morning about any of the Gov’t’s reports being cooked, goosed and massaged, this is about one of those reports where something is very wrong, and we need an explanation.

Here’s your snippet:” A superficial take of today's jobs report would note that both jobs and earnings "blew past expectations, flying in the face of Fed rate hikes", and while that is accurate at the headline level, it couldn't be further from the truth if one actually digs a little deeper in today's jobs numbers.

Recall that back in August, September, and October we showed that a stark divergence had opened between the Household and Establishment surveys that comprise the monthly jobs report, and since March the former has been stagnant while the latter has been rising every single month. In addition to that, full-time jobs were plunging while part-time jobs were surging and the number of multiple-jobholders soared.

Fast forward to today when the inconsistencies not only continue to grow, but have become downright grotesque.

Consider the following: the closely followed Establishment survey came in above expectations at 263K, above the 200K expected - a record 7th consecutive beat vs expectations - and down modestly from last month's upward revised 284K... numbers which confirm that at a time when virtually every major tech company is announcing mass layoffs.

... the BLS has a single, laser-focused political agenda - not to spoil the political climate at a time when Democrats just lost control of the House as somehow both construction (+20K) and manufacturing (+14K) added jobs according to the BLS, when even ADP now reports that these two sectors combined shed more than 100,000 workers in November.

Alas, there is only so much the Department of Labor can hide under the rug because when looking at the abovementioned gap between the Household and Establishment surveys which we have been pounding the table on since the summer, it just blew out by a whopping 401K as a result of the 263K increase in the number of nonfarm payrolls (tracked by the Household survey) offset by a perplexing plunge in the number of people actually employed which tumbled by 138K (tracked by Household survey). Furthermore, as shown in the next chart, since March the number of employed workers has declined on 4 of the past 8 months, while the much more gamed nonfarm payrolls (goalseeked by the Establishment survey) have been up every single month.”

Chuck again… well that total gap has grown to 2.7 Million jobs… Sooner or later that big fat lie the BLS keeps telling is going to come back to haunt them… I hope in my lifetime so I can say, “neener, neener, neener, liar, liar your pants are on fire!

Market Prices 12/5/ 2022: American Style: A$ .6800, kiwi .6402, C$ .7450, euro 1.0554, sterling 1.2264, Swiss $1.0695, European Style: rand 17.2647, krone 9.7789, SEK 10.3057, forint 388.80, zloty 4.7411, koruna 23.0740, RUB 62.23, yen 135.37, sing 1.3494, HKD 7.7578, INR 81.29, China 6.9570, peso 19.53, BRL 5.2194, BBDXY 1,256.58, Dollar Index 104.53, Oil $81.83, 10-year 3.51%, Silver $23.01, Platinum $1,023.00, Palladium $2,910.00, Copper $3.77, and Gold... $1,794.68.

That’s it for today… This weekend marked the 32nd anniversary of the day, that Iben Browning said a major earthquake would occur in the St. Louis area. Of course it didn’t happen, but, you should have seen all the disaster planning that had to be done by Companies. I was in charge of coming up with the disaster plan for the Bond Dept at Mark Twain Bank. It was quite the undertaking! Our Blues are back to losing games again… UGH! My beloved Mizzou Tigers will play in the Gasparilla Bowl in Tampa on Dec. 23… And both the basketball teams of Mizzou and St. Louis U, won their respective games this past weekend, so onward and upward! I’m still having coughing fits this morning, so I haven’t been able to sing along with the Christmas music that’s playing… The Stephen Kummer Trio is playing their version of: Baby It’s Cold Outside… I think I told you this in prior years, but the all-time best version of that song was sung by Ann Margaret and Al Hirt… OK, I hope you have a Marvelous Monday today, and please Be Good To Yourself!