Inflation isn’t going away

• The dollar drifts up and down.

• Gold moves higher on Friday.

Good Day… And a Marvelous Monday to you… In my past life, I would be taking today off, as it is a national holiday… But, given my status as non-working, I thought what the heck! Well, the NFL didn’t make any friends, and received a lot of criticism, even from a senator, about putting a playoff game on a streaming channel… As well they should! The game in Buffalo had to be moved to today, as is the norm for Buffalo, they were getting a winter storm on Saturday… Went to dinner last night with my good friend, Gus, who’s down here for the winter like me! Seals and Crofts greet me this morning with their great song: We May Never Pass This Way Again… 

Well, last Tub Thumpin’ Thursday saw the STUPID CPI print… And even with all the hedonic adjustments that the BLS adds to the inflation calculation, the report showed that it was too soon to sound the “All Clear” siren on inflation… This from the headlines: “Last month, overall prices rose 3.4% from a year earlier, up from 3.1% in November, according to the Labor Department’s consumer price index. On a monthly basis, costs increased 0.3% after virtually flatlining the previous two months.”

And that proved to be something that the markets couldn’t shake all day, and the dollar rose, and stocks sunk… IF, and that’s a BIG IF, the Fed Heads really care to look at the STUPID CPI, that meant that they would not be ready to cut rates as soon as March, as the markets once thought.

And Fed Head, Loretta Mester confirmed my thought last week when she said that “March was too soon to cut rates”…

And Fed Head Neel Kashkari had this to say (Reuters) “Minneapolis Federal Reserve Bank President Neel Kashkari said he would err on the side of overtightening monetary policy rather than not doing enough to bring inflation down to the central bank’s 2% target, the Wall Street Journal reported on Monday.

“Undertightening will not get us back to 2% in a reasonable time,” Kashkari said in an interview with the Journal.

Kashkari said he needed more information to come to a firm decision on interest-rate steps moving forward. “I am not ready to say we are in a good place,” he told Journal.”

It’s at this point that I say, “I told you so”… I told you inflation was sticky, and that March was too soon…  

Not so fast there Chuck… What about the very weak PPI (wholesale inflation) that printed on Friday? Well, the bond boys seemed to recharge their thoughts of rate cuts early this year because of that, you do have that as a result of the weak PPI… And on Friday, the dollar drifted… Gold gained $20.10, and Silver gained 43-cents…  So, it’s only the bond boys that took the PPI print to heart… 

Now knowing that inflation had ticked higher in December, you would have thought that the dollar would lose ground, and Gold would gain ground… Stocks would get sold, and bonds would get sold… And you, and I would have been wrong!  

So what gives? The dollar on Thursday morning was down 2 index points to start the day, and then only ended down 1 index point at the end of the day, which meant that the dollar gained during the day… Gold, which was up $7 in the early trading, only gained $4 by the end of the day, thus losing $3 intraday… Stocks were down 271 points and then miraculously turned around to a flat trading day…  

I would say that there had to be some great interference during the trading day Thursday, And then on Friday… Gold took off to the races, and brought Silver along.. .At one point in the day Gold traded as high as $2.061, but ended the day up $20.10 to close at $2,049.50… Silver saw an even greater gain with it trading at $23.52, which was 76-cents higher, but had to settle for a gain of 43.5-cents and a price of $23.19… 

So, maybe it took the traders a day to realize that inflation isn’t going away that easily, and the geopolitical problems are escalating, and that there needs to be some protection from inflation nd wars, after all… Maybe, just maybe, because you never know, what’s on their minds these days… 

Friend, Ed Steer, had this to say about that news: “This whole EV thingy is turning into a big bust, as I knew it would.

I’ll never own one of those things. It’s -31C/-24F here right now — and they are totally useless when it’s this cold.”

It was negative 5 degrees in St. Louis yesterday…  

In the overnight markets last night… The dollar drifted a bit higher gaining 1 index point in the BBDXY index… The currencies all look like they are bang on levels they were last Friday… All except the Russian ruble, which is on the rally tracks the past week… Gold is up $3 to start the day today, and Silver is flat as a pancake (Head East)… The price of Oil slipped a buck and trades this morning with a $71 handle… And the bond boys (talked about above) have moved the 10-year’s yield back down to 3.93% to start the week… There will be another handful of Fed Head speakers this week, and maybe they can get the message across that rate cuts aren’t in the cards for early this year… The speakers last week, apparently didn’t get the message across clearly… 

I read a report this past weekend that talked about how the Japanese Yen is losing its safe haven status… Now, we need to back up here and talk about the Safe Havens that exist… There has been safe havens VS the dollar since Nixon took the Gold standard and threw it in the trash. They were Pound Sterling, Yen, and Swiss Francs… And have remained as safe havens since, with varying degrees of importance… So, to say that yen is losing its safe haven status is no big deal… The euro has become the offset currency to the dollar, and therefore, when there are problems with the dollar, traders flock to euros… I’m just saying.. 

The U.S. Data Cupboard late last week has been talked about already above… And today’s Data Cupboard is empty because of the Holiday. On Wednesday this week we’ll see Retail Sales for January… The BHI indicates to me that this report will be OK… no negatives, no moon shots, just OK… 

To recap… The end of the week last week was interesting in that we say Gold & Silver champing at the bit to move higher, but being held back by the short paper traders… The Stupid CPI surprised the markets with a stronger than expected print, and Chuck was slapping himself on the back, saying I told you so! 

For What It’s Worth… Ok, this article goes against everything that I’ve been warning people about for decades now, and it gives some very interesting takes on the debt that I think are all malarky…

Here’s your snippet: “US national debt recently topped a record $34 trillion, but worries over its size are misguided, former Federal Reserve economist Claudia Sahm wrote in a Bloomberg op-ed.

Although concerns now abound among both politicians and consumers, pessimists are overlooking the amount of money potentially available.

“Yes, $34 trillion is big number, but $142 trillion is even bigger and much more important because it represents the total wealth of Americans —a massive resource that helps fund government debt and deficits,” she said.

Sahm also noted that some borrowing can provide economic benefits and advance societal goals, such as programs that lower child poverty and the development of COVID vaccines.

US debt skeptics have also warned that the threat comes more from the fact that interest rates have sharply increased, meaning that borrowing costs associated with federal debt will also rise.

Those costs will boost debt higher, feeding a cycle that some have warned could eventually lead to some form of default in as little as 20 years.

But debt servicing costs, though at a record $882.6 billion, make up a smaller percent of GDP than in the prior decades, Sahm noted. Today, it stands at 3.4% of GDP, below the late-1990s level of 4.3%.

“The government can easily service its debt because of its unlimited taxing authority and ability to issue more US Treasury securities to repay maturing securities,” she wrote.”

Chuck again… Ok, I don’t know what planet she came from or where she got her degree, but C’mon, let’s be serious here… Does she really think that the U.S. citizens will bail out the country? Well, if you do, you can write your check to the U.S. Gov’t, for $265,000 because that’s each taxpayer’s portion of the debt… According to the Debt Clock…  Now, granted there are quite a few people who could write that check and not have it bounce… But the majority of us couldn’t, or wouldn’t be able to do that… I’m just saying…  I keep thinking of something my mom used to say, “you made your bed, now lay in it”… 

Market Prices 1/15/2024: American Style: A$ .6663, kiwi .6198, C$ .7455, euro 1.0956, sterling 1.2738, Swiss $1.1717, European Style: rand 18.6569, krone 10.3170, SEK 10.2945, forint 345.48, zloty 3.9851, koruna 22.5458, RUB 87.64, yen 145.70, sing 1.3334, HKD 7.8207, INR 82.88, China 7.1750, peso 16.87, BRL 4.8633, BBDXY 1,226.38, Dollar Index 102.52, Oil $71.68, 10-year 3.93%, Silver $23.19, Platinum $917.00, Palladium $981.00, Copper $3.76, and Gold… $2,052.55.

That’s it for today… I was quite wordy this morning, just goes to show ya, that give me the time (like this past weekend) to think about stuff, and you get a lot of words! Congrats to the Texans, Chiefs, Packers, and Lions who won their playoff games this past weekend… Two more games today… Our Blues had been playing better hockey lately but lost at home to the Bruins Saturday night… UGH! More rain is forecast for all day today down south… UGH! This has been the worst weather January that I’ve experienced down here this year, but I’m not going to complain about it, like I said above it was negative 5 degrees at home yesterday… 74 degrees sounds pretty good when you consider the rest of the country is freezing right now… The Beautiful Dusty Springfield takes us to the finish line today with her song: You Don’t Have To Say You Love me…. I hope you have a Marvelous Monday, today, and enjoy your holiday if you get one today, and please remember to Be Good To Yourself!