Good Day…And a Wonderful Wednesday to you! What happened yesterday and last night? I don’t know, because I slept most of the day yesterday, and then dozed off again at 7pm and slept through the night. I guess my body needed the rest, but that was a little too much I think! So, normally, I check things during the day and through the night, make notes about what I want to talk about, and then when I wake up the next day to write, it’s not like I have blank screen to work with… But not yesterday, so this morning, is a visit to the past, when I would write it all in the morning, meaning that I got to work at 5 am… That’s never going to happen like that again, trust me on that one! The Ramsey Lewis Trio greet me this morning with the toe tapping version of the song: Santa Claus Is Coming To Town.
Well, at first glance this morning, I see that the dollar fell back from its early morning gain yesterday. I left you yesterday, with the BBDXY up 9 index points, but throughout the day, inch by inch, little chunks of the BBDXY were taken away and the index ended the day up only 4 Index points. Still up for the day, but you wouldn’t be able to tell that when looking at the currencies, as they seem to be trading in the same clothes as yesterday. Gold found a way to gain $7.60 on the day and end the day at $1,780.20. Silver, on the other hand, didn’t participate in Gold’s gains, and ever since Silver traded above 22-cents it has been sold… yesterday’s loss was 46-cents… I guess the short Silver paper trades were making their way into the Comex.
The price of Oil gained $2.50 yesterday, and ended the day with an $86 handle. Our friends, (NOT!) at OPEC announced that they are looking at further production cuts, and that news got Oil bubbling up through the ground, like Texas tea, no wait! This is no time to sing the Clampet’s song Chuck! Well, OK, but that was what was on my mind there, you can’t get mad at me for that! OK, then just tell the dear readers what happened with bonds yesterday… OK, bonds got bought again yesterday, and the 10-year’s yield dropped to 3.78%… I guess there are more people out there thinking that the Fed Heads are going to pivot on rate hikes, and it’s time to buy the best yield you can get, right? Not so fast there Tim… I still believe the Fed Heads will hike again in December… So, it’s not time yet… wink, wink.
I might as well talk about the Producer Price Index (PPI) because that’s what caused the dollar to weaken and bonds to get bought yesterday… The Rocktober PPI came in weaker than expected at .2% VS .4% expected. That got the folks that believe that the previous rate hikes have cooled inflation, all lathered up, and ready to go dancing in the streets! Does one print change things? I don’t think so… just like I used to say, does one Swallow mean summer is here? Let’s not get ahead of ourselves here folks… This was one print, now if next month we see further weakening, then you might have something, but I doubt that will happen.
And you don’t have to take my view on that alone, Christopher Waller, a Fed Head, had this to say yesterday, “Waller said the Fed has got a ways to go before its stops hiking and the market got “way out in front” over the unexpected cooling in inflation last week.” – Bloomberg.com.
In The overnight markets last night… The dollar got sold a little more, with the BBDXY index down 2 index points, to start the day, that will have some real economic news for us in Retail Sales and Industrial Production/ Capacity Utilization… Gold is flat to up a buck this morning, while Silver has gained back most of yesterday’s loss, gaining so far this morning, 35-cents. Oil is up to a $87 handle this morning, and bonds are at the same level as yesterday’s close.
Another item that pushed the price of Oil higher, was news, not to be taken lightly, that 2 missiles from Russia found their way into Poland, killing two… I don’t know if these were stray missiles, but I doubt that seriously, because of the technology that these weapons have these days, make them quite accurate. So, was this an attempt by Russia to draw more countries into this conflict? I sure hope not, and so far Poland has not returned fire, nor do I expect them to… But all of this saber rattling has got the price of Oil bubbling, and Gold well bid…
In a follow up of what I was talking about in a previous Pfennig, CNBC.com reports that: “Households increased debt during the third quarter at the fastest pace in 15 years due to hefty increases in credit card usage and mortgage balances, the Federal Reserve reported Tuesday.
Total debt jumped by $351 billion for the July-to-September period, the largest nominal quarterly increase since 2007, bringing the collective household IOU in the U.S. to a fresh record $16.5 trillion. That’s an increase of 2.2% from the previous quarter and 8.3% from a year ago.
The increase follows a $310 billion jump in the second quarter and represents a $1.27 trillion annual increase.”
Chuck again… yes, well I would think that inflation is a main culprit here, as all the things that people have been buying in recent times, have gotten very expensive, and the costs go up, so does the credit card balances, and the home loan balances, and so on…
OK, longtime readers know that I’ve talked about a supply crunch in Silver for years now, and it has never actually come to pass, because of outside interference. But… I saw this on Kitco.com today, and thought it was a good reminder of the supply crunch that Silver is currently in… here you go: “The stocks of silver held by the London Bullion Market Association and the Comex, in New York, are thinning out. Silver inventories in London (the LMBA) have fallen for 10 straight months and are now sitting at a new record low of just over 27,100 tonnes, or 871.3 million ounces.
On the Comex, registered silver totals just 1,186 tonnes, or 38.13Moz, a five-year low. In September the LBMA vaults lost 45.166Moz, more than the Comex’s entire registered category.
Analysts are keeping a close eye on declining silver stocks worldwide, including Sprott Money, which wrote an article on the subject. The article references a column by Bullion Star’s Ronan Manly, in which he states that “There is an unprecedented situation emerging in London, where the relentless hemorrhaging of one of the world’s largest stockpiles of silver is now well and truly under way.” -Kitco.com
Chuck again… As long as the Big 8 Bullion Banks are allowed to hold short positions in Silver that far outweigh the Silver that’s above the ground, then Silver will never be able to be priced correctly, as far as supply and demand are concerned… I’m just saying…
In Today’s Data Cupboard we have the Rocktober print of Retail Sales, which I told you earlier in the week, that I expected this to show some life after months of being either negative or flat. The BHI indicates that it will be a stronger print today. We’ll also see Rocktober prints of Industrial Production, I think it will show weakness, and Capacity Utilization, I think it will be steady Eddie…
You know, it make me want to yell at the walls, when I see all these Fed Heads our on the speaking circuit… Who pays for those boondoggles? Ahem… Besides, they never rally tell us what’s going on at the Fed HDQTRS…. We will see 2 Fed Head speakers today, and tomorrow there will be 4! UGH!
To recap.. The dollar started the day up but by the end of day it was still up, but not by as much as the start of the day. Russia fired two missiles into Poland, and that got the world all jimmied up pushed the price of Oil higher, and Gold got well bid… OPEC announced they will discuss further production cuts, and that too helped Oil to gain yesterday. The overnight markets kept the pressure on the dollar, and it will be interesting to see what goes on today, with a couple of real economic reports on the docket.
For What It’s Worth… This is a very good article that straightens out all the claims by the current administration that the inflation is “greedflation” and that companies are pushing prices up to gouge customers…
Here’s your snippet: “Even as price inflation slows and we move past June’s peak, progressives continue to push the concept of “greedflation”—that this year’s price inflation is caused by corporate greed and price gouging. This is inaccurate, based on bad economics, and it blames a consequence of the problem rather than the problem itself. If we want to address the real issues in the economy and avoid similar pain in the future, we need to get serious and drop “greedflation” from the discussion.
The standard response to the assertion that this episode of price inflation has been caused by greed is to point out that there is no reason to think the level of “greed” in the economy has suddenly increased. That is true, but it doesn’t address the core of the “greedflation” argument. Most proponents will admit that the price inflation was kicked off by supply shortages resulting from the lockdowns. But they will argue that in an environment where everyone is talking about and expecting inflation, companies can raise prices even higher than rising costs would have compelled them. Companies can then enjoy larger profits, the story goes, at the expense of already struggling consumers.
So what’s the problem with this? Well, it rests on a common but flawed understanding of prices. People often talk about prices in two contradictory ways. Either they frame them as objective measurements of value or as arbitrary numbers made up by businesses. Neither of these characterizations is correct. Prices are not an indication of objective value. In fact, they come about through exchanges between people with expressly different valuations of the goods and services being traded.
If you try to sell me a cup of coffee for $4, you demonstrate that you value the $4 more than the cup of coffee. Notably, the exchange will only occur if I value the cup of coffee more than the $4 I’d be giving up. So prices are records of exchange ratios brought about by differing subjective valuations. Whenever you choose not to buy something you can technically afford, you reveal the subjective nature of prices.
In that same way, prices are not arbitrary. As Thomas Sowell writes in the opening pages of his book Basic Economics, “While you may put whatever price you wish on the goods or services you provide, those prices will become economic realities only if others are willing to pay them.” Going back to the above example, you are free to jack up the price of your cup of coffee as high as you please, but you will not sell it until you charge a price someone is willing to pay. That’s why the very concept of price gouging is flawed. You may not personally like how high the price is, but others still consider it a worthwhile deal.
The fact that companies are charging higher prices these days does not mean those prices are somehow wrong. In fact, we know they are not wrong because people have demonstrated a willingness to pay them. In other words, this year’s higher prices are not the problem—they merely reflect the problem. Instead, the real issue is that State governments locked down businesses in 2020 while the Federal government created trillions of new dollars and injected them directly into the economy in 2020 and 2021.”
Chuck again… I know, I know, a very long snippet this morning, but.. the article is quite long, and if you have the time to click on the link and read it, well… then you’ll see why it was a long snippet…
Market Prices 11/16/2002: American Style: A$ .6777, kiwi .6170, C$ .7547, euro 1.0425, sterling 1.1908, Swiss $1.0640, European Style: rand 17.2217, krone 9.9425, SEK 10.4155, forint 390.28, zloty 4.5127, koruna 23.3474, RUB 60.47, yen 139.47, sing 1.3675, HKD 7.8225, INR 81.30, China 7.0794, peso 19.35, BRL 5.3260, BBDXY 1,272.13, Dollar Index 106.00, Oil $87.35, 10-year 3.78%, Silver $21.92, Platinum $1,021.00, Palladium $2,096.00, Copper $3.76, and Gold… $1,781.67.
That’s it for today… Well, a couple of years ago, I told my kids that when their mom is away, and I’m all alone at home, they might want to check in with me, since my health history isn’t the greatest… And this year they’ve finally gotten the message. Thank you Dawn, and Andrew… Our Blues get back on the ice tonight VS the Blackhawks.. This used to be a HUGE rivalry, but in recent years, the two teams have been in different divisions, and don’t play each other that much… Let’s Go Blues! Tomorrow night, downtown St. Louis and nearby will be crazy, with two soccer games, and a hockey game going on… I hope all three are well attended, and ready to cheer! Our new soccer stadium will make its premiere opening tonight… That’s pretty neat… Vince Guaraldi Trio takes us to the finish line today with his song: Charlie Brown Theme… I hope you have a Wonderful Wednesday today, and please remember To Be Good To Yourself!