Three central bank meetings this week

Good Day... And a Marvelous Monday to you! Well, after 10 days, oldest son Andrew, and his lovely family went back home yesterday... Our place here on the beach, will be quite quiet, now that little Miss Evie is no longer here... She's so darn cute, you wouldn't believe how well she converses with everyone, at 4 years old... I'm still not 100% recovered from last weekend's trip to the ER, but I'm feeling stronger ever day (Chicago)... Kathy and me, switched places at the hospital, and that's all I have to say about that... My beloved Cardinals need a change in their locker room, do you hear me Mr. Mo? The Ozark Mountain Daredevils greet me this morning with their song: Jackie Blue

Well, Friday was the day that the markets had been waiting for all week, as the June PCE (Personal Consumption Expenditures) printed... And the markets got disappointed, because the PCE didn't show that inflation had budged one iota, and therefore, lessening the chances of a Rate Cut this week, when the FOMC Meets... The PCE for those of you keeping score at home, was 2.5%... Core PCE was 2.6%... So... As I keep telling you , inflation is sticky, and not going away just yet... 

The dollar saw some selling on Friday, and then suddenly it was back to where it started the day... The BBDXY started the day, Friday, at 1.257.48, and fell to 1.254 around noon, and then suddenly it was back to 1,257.08 to end the day and week... The euro remained below 1.09, but with the European Central Bank's (ECB ) last meeting not producing a rate cut as most observers thought they would see from them, the euro is free to move about the country and I wouldn't be surprised if it climbed back to 1.09 soon... 

The Japanese yen has seen a crazy rally VS the dollar in recent trading days... I talked about this last week, and said that the Bank of Japan (BOJ) was going to meet this week, and the currency guys and gals all think that the BOJ will hike rates... But as I said last week, all that could be thrown to the wolves if the BOJ disappoints and keeps their powder dry... I'm of the thought that historically, the BOJ is known to disappoint, so there's that... 

Gold, after getting whacked on Thursday by the short paper traders, saw a rebound on Friday, and gained $23.70, to end the week at $2,387.10... Silver also went through the gauntlet on Thursday, but rallied a bit, on Friday, gaining 8-cents, to end the week at $28.00... Imagine (John Lennon) if you will where these two metals would be in price, if it weren't for the short paper traders... I'm just saying...

The price of Oil lost a buck on Friday, and ended the week trading with a $77 handle... It was the worst performance week for the price of Oil since May... And the 10-year's yield saw it rise to 4.25% early last week, and then saw it lose all its gains in the week, to end the week at 4.20%... I've said this before, I've lost all understanding of what the bond boys are thinking these days... 

In the overnight markets last night...The dollar got bought again with the BBDXY gaining more than 1 index point to start the week at 1,258.40... The currencies all look like they need a rescue plan... With the dollar soaring once again, and here's where I just don't get what happened on Friday, with the dollar losing ground, until it wasn't... What happened to cause this turnaround? Or was it simply the PPT spending some of their Exchange Stabilization Funds to buy dollars and protect it once again from a steep slide? So, with the dollar soaring again, you have to step back, go down the chute and batten the hatches, because this could last a while... 

Gold is up to start the week $4 worth... And Silver is up 12-cents to start the week... The price of Oil fell another buck overnight and trades with a $76 handle this morning, while the 10-year continues to lose yield, from all the buying and it sits at 4.16% this morning... 

If the markets are so sold on the Fed Heads cutting interest rates, then why is the dollar soaring? When you cut interest rates, you debase the currency, it's that simple... But, we live in a world of opposites... Bad economic data causes the dollar to rally.. interest rate cuts don't damage the currency... It's all backwards to how I was taught the markets worked... When did this start? Well it started coming into play around 10 years ago... That's from my recollection, that is... I get why stocks rally with interest rate cuts, as they don't have to compete with high yielding deposit accounts, but the dollar? Isn't life strange (Moody Blues) a touch of a turn of a page...

Well, the FOMC meets this week, on Wednesday... I doubt they will cut rates this week, but they could... They've already gone on record as saying that "they will entertain rate cuts even if their target inflation rate is still above 2%" So, there's that!

The Bank of Japan meets this week, along with the Bank of England (BOE) and the Fed Heads... So, this could be a very interesting week, or it could turn out to be a dud... I expect the BOJ to hike rates, and for the BOE And Fed Heads to keep their powder dry... I guess we'll see... eh?

This will be short-n-sweet this morning, as I've got to get out the door to the doctor's office who treated me when I was in the hospital last week, it's just a follow up, but still, I made the appt, and I'll keep it! 

The U.S. Data Cupboard has quite a bit for us to chew on this week... But today, the cupboard is bare... Like I said above, the FOMC meets this Wednesday, and the Jobs Jamboree for July prints on Friday this week... Two big events data-wise for this week, that's about all I can handle these days! 

To recap... The dollar was down for the count on Friday, until it wasn't... Strange happenings in the dollar for sure... But overnight the dollar moved higher, and continues to push the currencies down... Gold & Silver rallied on Friday, and are up in the early trading today... Chuck talks about how opposites rule these days, with no fundamentals in play, except with the price of Oil... Strange happenings for sure... 

For What It's Worth... This article comes from the great writer: Ambrose Evans-Pritchard, of whom I've quoted and used here plenty of times in the past... 

Here's your snippet: "The first China Shock in the 1990s and early 2000s flooded the world with cheap goods and redrew the contours of the global economy.

It let multinationals exploit labour arbitrage, playing off Chinese wages against the wages of blue-collar workers in America and Europe. It lifted both the profit share of GDP and the Gini coefficient of inequality to the highest levels since the Second World War.

Eternal optimists had hoped for a change of course at last week’s third plenum, an event held every five years that has set economic strategy ever since Deng Xiaoping embraced capitalist roadsters at the third plenum of 1978. Instead, they got another kick in the stomach.

The communiqué exhorts the Chinese people to “persist” 17 times. This means “persisting” with policies that divert a big chunk of the national pie towards state bodies and companies, which are then pushed into chronic overinvestment by warped incentives that defy market price signals but enhance party control.

This structure leaves households with the leftovers, just 37 per cent of GDP, compared to 51 per cent in Germany, 60 per cent in Italy, 62 per cent in the UK, and 68 per cent in the US. It crushes consumption and is the root cause of the Chinese export tsunami.

The imbalance is getting worse, not better. China is reverting to the worst pathologies of its catch-up growth phase a generation ago. It was tolerated back then. It will not be tolerated now.

It rewarded capital, while the West’s bottom half was left behind, poisoning our democracies. It compounded the brain vs brawn chasm caused by digital tech. It weakened our defences against the mischief of social media."

Chuck again... Well, this sure puts a different light on what I had thought the meeting was all about... 

Market prices 7/29/2024: American Style: A$ .6552, kiwi .5883, C$ .7228, euro 1.0837, sterling 1.2845,      Swiss $1.305, European Style: rand 18.3616, krone 10.9883, SEK 10.5056, forint 361.42, zloty 3.9564, Koruna 23.4126, RUB 86.73, yen 153.89, sing 1.3435, HKD 7.8109, INR 83.79, China 7.2578, peso 18.43, BRL 5.6563, BBDXY 1,258.40, Dollar Index 104.45, Oil $76.79, 10-year 4.16%, Silver $28.12, Platinum $946.00, Palladium $908.00, Copper $4.10, and Gold.... $2,392.12.

That's it for today... Well, we decided that since both of us have been through hell and high water in recent days, that we would head back to St. Louis a week earlier than planned... My beloved Cardinals found a way to win at least 1 game of the 3 games series with the Nationals.. UGH! I don't recall if I've ever told you how much I love it down here, in S. Florida... I could see myself living here, if I were all alone... But I'm sure Kathy will outlive me, so I don't have to worry about that! People back home say, "But it's so hot there"... Oh, and it's not hot in St. Louis! Oh well, I'll be back here sometime in the fall... I've got an oldie but goodie for you here: Herb Alpert & The Tijuana Brass take us to the finish line today with their song: This Guy's In Love With You.... For all you youngster out there that don't know that song, You-Tube it... I hope you have a Marvelous Monday today, and Please be Good To Yourself!