The new mantra: Rates – Higher for longer

• Dollar gets sold on the hint that rates could be cut at year end.

• Gold rallies on Wednesday, and gets sold on Thursday... Go figure!

Good Day... And a Tub Thumpin' Thursday to one and all! Another game where the Cardinals' bats were silent or left in the bat rack yesterday, and they came home from a 6-game road trip at 3-3... Should have been 5-1... And the city would be besides itself over the resurgence of the team... But it won't, and we carry on... It was a beautiful day here down south, nice and warm, with plenty of sunshine... The folks back home will say, "it was just as nice here", and I'll say... But did you have a beach to play on or relax on? Did you have sea breezes all day that just felt like manna from heaven? I rest my case! I can't begin to tell you how beautiful the view out my sliding door is... Folks that have been here marvel at how beautiful it is... I say no more... Golden Earing greets me this morning with their song: Radar Love.

Well, yesterday was an FOMC Day, and it was about as exciting as watching paint dry... Ok, first, let's revisit what I told you yesterday that the meeting would bring from the Daily Pfennig 5/1/2024: " I think the Fed Heads will pass again on a rate cut, but try to hold on to the stock jockey’s attention by still talking about how they still expect inflation to recede and bring about a rate cut or two before year-end…  They would be lying of course, but what else do you expect from them? "

And now, let's see what the Fed Heads had to say yesterday... First of all, they left rates unchanged, so Chuck had that right, and then they held out an olive branch to the elites, and stock jockeys, by saying that they still held out hope for a rate cut later this year... So, Chuck nailed that one too! Maybe the mass Media needs to talk to me before the FOMC meets, so they sound intelligent?  

So, after the FOMC announcement, the dollar sunk , and Gold & Silver rallied... The BBDXY was down 3 index point on the day, while Gold gained $33, and Silver gained 30-cents... Gold closed at $2,320.00, and Silver at $26.74... it will take a few more days of gains like that to get Gold & Sliver back to where they were before the rug was pulled out from under it late last week, and on Monday this week. 

The selling of Oil continued yesterday, and Oil ended the day trading with a $79 handle... And the 10-year traders didn't know which way to go, and the bond ended the day with 4.65% yield... 

In the overnight markets last night... the dollar got sold some more, the BBDXY is down 5 index points this morning, but the strange thing is that the currencies aren't showing any gains...

Something strange is going on for sure this morning. The Japanese yen is the best performer VS the dollar as we start our day today, and that is because the Bank of Japan decided to spend about $23 Billion intervening and buying yen... Well, that will turn out just like all their other times of intervening, to be wasted money! The markets have deeper pockets than any Central Bank, and if the markets want to fight a Central Bank, the Central Bank loses... So, we'll see where this all ends up... After yesterday's gain for Gold, I thought, "Well, the short paper traders have taken Gold down enough for now." But when I turned on the screens this morning, the short paper traders are back at it! UGH!

Gold is down $19 to start the day, and Silver is down 20-cents... Say what you want about this downward move, but to me, it's nothing more than a buying opportunity... Any time the short paper traders do their thing, they create yet another buying opportunity! So, there! That's an optimistic statement on a day when the metals are getting sold! I knew you had it in you, Chuck... Way to go! Right arm, out of state! 

The price of Oil didn't recover last night, an remains trading in the $79 handle... But the bond boys are back to whooping it up, and dancing in the streets, because Jerome Powell, mentioned that he was still holding out hope of a rate cut this year... C'mon guys, don't you see that for what it is? It was a bone that Powell threw you to get you to think rates will be lower at year end, and persuade you to buy bonds now to lock in yield.... That's all it was, it was not a guarantee that rates will be lower, in fact if you had done your homework, you would have seen this for what it was and not go all bananas buying bonds! The 10-year's yield is at 4.59% this morning... Tsk, tsk, tsk...

Ok, you all know that I had a long working relationship and friendship with Frank Trotter, who has come out of retirement to start another new bank... Battle Bank... Well, the bank is not officially open yet, but Frank sent me this and asked me to notify you dear readers about something that he's got going right now...  here's Frank: 

"Hey Chuck, I thought your subscribers would want to know that we are making great progress towards the opening of Battle Bank. The team is testing our systems, and the regulatory process continues to proceed. While we don't control and can't predict the pace of the approvals there is definitely light at the end of the tunnel. As we move closer to the finish line, we are offering convertible notes issued by Battle Financial, Inc. - our proposed future bank holding company - to accredited investors.

Thanks Frank... people are always asking where can find yield in investments these days... And now I have an answer! 

Alrighty then, we're back to the markets now... or better yet the dolts that run this country!  And here's what I'm talking about regarding the dolts that run this country.. This from : www.needtoknow.com "Tucked away in the $95 billion military aid package for Ukraine, Israel and Taiwan is a $3.5 billion slush fund to open new processing centers for Muslim migrants, in what Senator Eric Schmitt described as a bid to “supercharge mass migration from the Middle East.” The $95 billion package does not include any funds to help rebuild America’s border defenses against illegal migration – but it does contain $481 million to settle migrants in US cities, and of course, the $3.5 billion to expand migration programs worldwide." 

Ok, that's just what we need, right? more immigrants to pull on the finances of the U.S....  I'm not against immigrants that go through the channels and tests and become citizens of the U.S. What I'm against is the mass immigrations of people that are not vetted or even will become citizens of the country, learn the language, lean the laws, obey the laws, and contribute to the tax base. 

Ok, I know I stepped into a pile of dog dookey there, but this is my letter, and I choose what it is that decide to talk about and today, that was it... 

I had better get going on something else before I lose half of my readers! A dear reader reminded me of something I wrote about year ago, regarding "who will buy our treasuries?" I had mentioned years ago, in the Pfennig, that it was rumored that the U.S. would enact a law that required 401k's and IRA accounts to only buy and own Treasuries... That never came to pass, but will the crooks in D.C. pull this out of the trash, and send it around the room to see if it sticks?  I guess we'll have to wait-n-see, eh?

Oh and the refunding announcement I mentioned earlier this week had some very interesting news... First of all, During the January – March 2024 quarter, Treasury borrowed $748 billion in privately-held net marketable debt and ended the quarter with a cash balance of $775 billion.... Then for the April to June quarter the Treasury announced that they would expect to borrow $243 billion in privately-held net marketable debt.  That is as long as the Gov't didn't overspend on the $748 Billion in the1st QTR... That would bring the total for 2024 so far to over $1 Trillion, and that's for just ½ of a year! IT appears to me that the Gov'ts call for a $1.5 Trillion Deficit this year is going to be larger than that!  I'm just saying...

And again the question arises about "who's going to buy all that debt"? At this point in the proceedings, we, as a country have just about ticked every nation that's not a up close and personal ally, off, and they are very reluctant to buy our debt at this point... Uh-Oh! 

With the dollar getting sold after the FOMC Announcement, the euro was able to climb back over the 1.07 handle, and sterling was about to climb back over the 1.25 handle. The rest of the currencies are still looking a little sickly...  That's about all I can say about them, since my mother told me to not say things that aren't nice... HA! Like that's ever stopped me before!  But it sounded good there... 

Did you hear there's a new currency in the world... Zimbabwe has issued a new currency call the ZIG... Oh, brother, where can I buy some ZIG?  As if! This currency will end up like the previous currency and not be worth a plug nickel in the future... I'm just saying...

The U.S. Data Cupboard yesterday, has the aforementioned FOMC Meeting, and The ADP Employment Report, which beat the expectations, but was weaker than the previous month's number... So, a mixed bag of data there... We also saw the national ISM Manufacturing Index for April and it did, in fact, do what I said it would do, and go back below the 50 level... So, Manufacturing continues to be in contraction, and one again prove my point that we're already in a recession, it's just that there's some much cash out there to be spent that it keeps the actual recession on the back burner... 

Boy I did stir up a hornet's nest on May Day with my comments about us wasting our money that we, as a country, do not have and sending to Ukraine, Israel, Taiwan...  You all made good points, and kept it civil so I responded to ones that I thought needed to be responded to... 

To recap... Well, the chief Fed Head was a two-handed economist yesterday saying that, "on one hand we will keep rates unchanged due to inflation not falling", and on the other hand, saying that "but we still see a rate cut later this year"... That second part got the dollar sold, and Gold & Silver bought again... Neil Kashkari Minneapolis Fed President said that he doubted rates would be moved at all this year... The price of Oil is getting treated badly these days, and bonds are getting sold again after being bought for a few days... 

Here's your snippet: "Did you hear? Bloomberg Opinion has a new columnist! His name is Olórin. The editors nicknamed him Mithrandir, but that’s a bit of a mouthful. So, uh, we’ll just call him Gandalf:

Now, you may be thinking, Gandalf looks awfully familiar to Marcus Ashworth, our European markets columnist. Just the other day, Marcus said the Fed’s 2% inflation target should be “put back where it belongs — as part of a wider monetary policy toolkit, not the one-tool-to-rule-them-all.” While the resemblance is uncanny, you’d be mistaken!

In Gandalf’s debut video for us — edited by Michael Johnson and scripted by Christina Sterbenz — the wizard explains why Middle Earth’s ring of power is the perfect metaphor for central banks’ 2% target, which rules everyone — even the Girl Scouts, apparently.

“Imagine inflation is Sauron and the orcs. At the height of the pandemic, inflation was everywhere. Food prices were ripping, villages were almost being starved — not quite, but hobbits do need to eat seven times a day,” Marc — err, I mean, Gandalf quips. “Think of central bankers as the Fellowship of the Ring, coming together to jointly fight inflation. Much like Boromir thinks he can use the ring to defeat Sauron, so, too do central bankers think they can use this 2% inflation target to beat price rises. But in reality, they’ve become slaves to their own power. This target has become something of a mythical force which they can’t break away from and it’s causing serious issues.”

Luckily, Gandalf says US Fed Chair Jerome Powell is aware of the risk:

But is he going to do anything about it? John Authers isn’t holding his breath. In his latest edition of The Year of Descending Dangerously, he says Powell’s “optimism for rate cuts has diminished significantly since the start of the year. That’s because the disinflation process that fueled this expectation has stalled, while the economy remains robust. There’s an ever increasing possibility of an inflation resurgence that might even push rates higher again.”

Chuck again.... I know, it's a silly way to saying the Fed doesn't have a clue, but I thought it was catchy, and FWIW worthy.

Market Prices 5/2/2024: American Style: A$ .6525, kiwi .5925, C$ .7285, euro 1.0700, sterling 1.2510, Swiss $1.0969, Europea Style: rand 18.6655, krone 11.0799, SEK 10.9197, forint 363.58, zloty 4.0960, koruna 23.4709, RUB 91.73, yen 153.98, sing 1.3593, HKD 7.8175, INR 83.46, China 7.2410, peso 16.94, BRL 5.1936, BBDXY 1,258.81, Dollar Index 105.75, Oil $79.45, 10-year 4.59%, Silver $26.38, Platinum $958.00, Palladium $964.00, Copper $4.48, and Gold... $2,301.90.

That's it for today, and the rest of the week... it's been so long now since I stopped writing on Friday's that I don't even think about not writing on Friday's any longer... I do have to remember to change my alarm time on Thursday night for the next three days! Saturday will be one week down, and one week to go, for me down here... Mother's Day will be coming up before we know it, so this is your first alert to make sure you take care of the mother in your life, be it your mom, or the mother of your children. I already bought my gift for Kathy... She won't care for it, but it's the thought that counts, right? Hopefully all three of my kids will come to the house on that day... I will say this about my 3 kids, they are busy people, always have something going on, to do, etc. Good for them! This weekend is also the Kentucy Derby! The run for the roses! Get your bets in on time! The Moody Blues take us to the finish line today with their great song: Never Comes The Day...  the song is from the album, "on the Threshold of a Dream"... I hope you have a Tub Thumpin' Thursday today, and please Be Good To Yourself!