Good day… And a Wonderful Wednesday to you! Today is finally the day I find out what sometimes causes the excruciating pain in my head, as I show up to the hospital at noon for an MRI of my brain. Like I said, jokingly last week, spoiler alert: they won’t find any! HA! The reason for this pain has been going through my head for 2 weeks now… Do you know all the horrible results you can have in two weeks? Well, I’m here to say that I seriously doubt it’s cancer-related, as I’ve been on daily chemo for the majority of 14 years… And the short periods of time that I wasn’t on chemo was is when I had tumors in my left eye and right mandible (jaw)… And I haven’t hit my head on anything recently, although when I was young I was knocked out several times. times on the football field… Ok, that’s enough! My second favorite Doobie Brothers song greets me this morning: Another Park, Another Sunday… “The city streets and the lonely highways that I walk down. My car is empty and the radio just seems to knock me down I’m just trying to find myself A cute smile that I can fit in… That’s right, I’m lost without you ”.
Another day of bogged down for currencies… The euro registered a very small slippage during the day, and the Australian dollar (A $) lost ¾ of a cent during the day. The BBDXY started the day at 1140.37 and ended it at 1144.42… A strong move in the index, but overall the currencies all looked at or near their trading numbers. yesterday… The price of oil experienced a huge price slide yesterday, falling from $ 76 on Monday to $ 73 and changes on Tuesday… Here is a thought for you… All gas stations increased their gas prices on Monday… How long do you think it will take them to bring them down again? Yeah… they’ll drag their food… and get every penny they can get from you and me who need gasoline to drive our vehicles…
Gold started the day yesterday with an increase of $ 18 but couldn’t maintain or add to this early morning gain, and ended the day up just $ 4.30… Silver couldn’t maintained its gain of 18 cents and ended the day losing 35 cents, but staying above $ 26… The only inflation news I saw yesterday was that the price of propane has doubled since the start of the month. year, and is now $ 1.00 I have a big horned gas grill that I no longer use … I only go for charcoal with my Big Green Egg, or Weber grill … Horned gas went through a propane tank in a month, and I had to take it out, go to the hardware store and get it refilled… I can’t imagine what that would cost per month today! Well I guess I can if I really think about it, but it hurts my head so I won’t …
In the night markets last night…. Markets were taken by surprise by the Dollar Index’s huge jump yesterday, and I’m scratching my bald head trying to figure out that one too … Currencies overnight stayed in their recent ranges, and l gold and silver are back on the rally tracks this morning, with gold up $ 9.50 and silver up 25 cents …
The only data yesterday that shouldn’t have helped the dollar, as the services index (ISM) fell from the bed, dropping from 64 in May to 6o in June … it was pointed out that it was a sign of stagflation … prices go up but production goes down … Well, anyway, that shouldn’t have led to a rally in the dollar index!
This leads me to believe that the people who administer the Exchange Stabilization Fund (ESF) were bored and had to spend some of the ESF funds … The dollar index is recovering and gold and silver can’t hold onto their first winnings … as the Services Index falls out of bed … Something smells fishy here and it’s not yesterday’s catch!
So, have you read about Reverse Repos at the Fed? Yeah, it’s gone crazy again, with the banks laying off all their low yielding products at the Fed…. Banks don’t just leave the money the Fed gives them to the Fed… I have a story for you in the FWIW section today that talks about this and what they’re doing in the markets, so stay tuned. listen, don’t change that dial!
Well, the US Data Cupboard today contains the minutes of the Fed’s FOMC meeting, which I mentioned yesterday … Markets will hold their breath until these minutes are printed this afternoon … I say … what’s the problem? Since the meeting, Fed Chairman Jerome Powell has spoken several times and explained that interest rates would not be raised until 2023 … End of discussion … minutes … So Hold on tight today, the wind will be gusty at times according to the minutes of the FOMC meeting.
To recap … There was a HUGE rally in the Dollar Index yesterday, but most currencies stayed in their recent ranges, only the Australian dollar was hit, but that is not part of the dollar index, so whatever is going on there is above my pay grade … gold couldn’t maintain its huge morning gain of $ 18 yesterday, and only earned $ 4.30 that day, and money did the same, losing its early-morning 18-cent gain to end the day down 35 cents … Chuck thinks the ESF was back at work to buy dollars .. Chuck also points out the mess in the repo market …
For what it’s worth… well, I prepared this article earlier this morning, so you know what it is… those damn repo… and this article quotes from a man who pointed out that it was a mess before the pandemic and now it’s even messier.
Here is your excerpt: “Two weeks ago, following the surprise hawkish announcement by the Fed’s FOMC that also increased administered rates on overnight pensions and the Fed’s IOER facilities by 5 percentage points. base at 0.05% and 0.15% respectively, we quoted Credit Suisse repo guru Zoltan Pozsar who best explained this in his post-mortem, writing that “the re-priced RRP facility will quickly become an issue. for the banking system: the banking system is going to be limited in assets (deposits flowing in, but nowhere to lend them but to the Fed), to limited liability (sliding deposits and nowhere to replace them except on the money market) . “
What he means by that is that, whereas before, the RRP rate of 0.00% did not reward the allocation of inert and excess reserves, but simply provided a place to park them, now that the Fed provides a generous increase in yield over the rates offered by the trillion. in the Bills, we are poised to see a drastic shift in the money market overnight, as trillions of capital reallocate itself from traditional investments to the Fed’s RRP.
In other words, as Pozsar puts it, “the RRP facility has started to sterilize the reserves… with more to come”. And just as Deutsche Bank explained why the Fed’s signaling was a policy error r *, in Pozsar the Fed also made a policy error – only this time with its technical rates – by sterilizing reserves because “c It is one thing to increase the rate on the RRP Facility when an increase was not strictly speaking necessary, and it is quite another to raise it “unduly” to a high level – as said. a money market fund manager: “yesterday we couldn’t even get basis points per year; most reliable counterpart points is a dream come true. “
5bps is too generous, according to Pozsar who warns that the new reverse repo rate will upset the state of “singularity” and “like heat seeking missiles, money market investors move hundreds of billions, making sharp 90º turns in search of even a base point yield at the zero limit – at 5bp, money market funds are encouraged to swap all of their treasury bills and park their cash at the RRP facility. “
This is because, as shown below, invoices earn less than 5 basis points over 6 months, and money market funds have more than $ 2 trillion in invoices. They are encouraged to sell, while others are encouraged to buy: institutions whose deposits have been “tolerated” by banks so far without interest are encouraged to harvest the range of 0 to 5 basis points offered by the invoice curve. Putting your money at a base point in bills is better than zero deposits. The sterilization of reserves therefore begins, and so the O / n RRP facility goes from a largely passive tool that provided a floor interest rate on deposits that the big banks have pushed back, to an active tool that “sucks” deposits that the banks decided to keep.
Chuck again… Ok guys, this is one of the markets you don’t deal in, so you are wondering why I chose to print this today… well it’s all about the bank and what banks do, and you’ve got money in the bank, haven’t you? It’s a vision of what’s to come… mark my words on it! And that’s not a good thing, because I don’t see it all going smoothly, and no one comes home with tears in their eyes … I’m just saying …
Before I went to Big Finish today, I wanted to share with you this quote, which my good friend Dennis Miller sent me yesterday… Don’t read it just once… Read it over and over, until that you fully understand what he is telling you. : “” What are the differences between Mark Zuckerberg and me? I give you private business information for free, and I’m a bad guy. Zuckerberg gives your private information to businesses for money and he’s the man of the year. “
Market price 7/7/2021: American style: A $ .7516, kiwi .7048, C $ .8040, euro 1.1822, sterling 1.3835, Swiss $ 1.0829, European style: rand 14.3084, krone 8.6718, SEK 8.6164, forint 300.82, 3.8205 zloty, 21.7084 koruna, RUB 73.77, 110.71 yen, sing 1.3465, HKD 7.7673, INR 74.60, China 6.4674, 19.95 peso, BRL 5.1333, BBDXY 1.143.53, Dollar Index 92.54, Oil $ 74.65, 10 years 1.35%, Silver $ 26,400, Platinum $ 1,104, Palladium $ 2,934.00, Copper $ 4.33 and Gold … $ 1,807.50.
That’s all for today… Another Chamber of Commerce day here in my summer house… I read yesterday that there was a printed map of hot spots in the world… I really hope that ‘they didn’t mistake the Midwest for a hot spot! Because we are not! You know in the 60’s I remember two weeks in summer a year where the daily temperature was over 100… No one was screaming about hot spots so it was summer! And while I’m at it, have you ever noticed the nightly weather reports where they show the record dates? They still date from the early 1900s! Well, not always, but most of the time… And these people didn’t have air conditioning! The tough old birds, that’s for sure! My beloved Cardinals won again in San Fran last night … of course I couldn’t stay awake to watch the game as it was played in San Francisco and started around the time I was about to call it day … Same thing tonight, and then I believe the Cardinals are done playing on the West Coast for this year … YAHOO! The Rolling Stones take us to the finish line today with their song: Dead Flowers… (I love this song!) It is from the Sticky Fingers album, which is the only Stones album I have ever seen. owns… I hope you are having a Wonderful Wednesday, and please be kind to yourself!