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ECB Raises Rates; The Golden Ruble

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70
By davefairtex
September 11, 2022

ECB Raises Rates; The Golden Ruble

Original Content
By davefairtex on
September 11, 2022
70

The market-moving event this week: the European Central Bank decided to raise rates by 75 bp, so now deposits are yielding (are you ready?): a grand total of 0.75%.  Back up the truck! Note: the ECB previously had negative rates from 2016-2022. Wolf has the charts:

ECB Shocked, Shocked, to Find that Inflation is Going on in Here, Hikes by 75 Basis Points, After 50-Basis-Point Hike in July (Source – Wolf Richter).

The unexpectedly large rate increase by the ECB – after remaining below zero for half a decade – caused the Euro to rebound more than a point, closing the week at 1.0043, up +0.13%. Yay Euro!

I made a bold prediction to a friend of mine last week: “Oh, the Euro won’t recover until we have peace over there.” Well, it turns out, a big unexpected rate increase can move the needle too. That said – looking at the weekly chart below, the surprisingly big rate increase just seemed to staunch the bleeding, rather than turn things around. My candle model assigned a poor rating to this week’s “long-legged doji” candle print for EUR/USD. So far, no reversal.

I do have a question though: will raising rates address the massive price increases caused by shortages of natural gas and electricity in Europe, which in turn were caused by “sanctions” on Russia? I’m thinking no.

While gold didn’t do all that well (up just +6.93 [+0.35], with the buck down -0.47%), silver and the miners staged a strong recovery. Silver was up 0.89 [+4.72%] on the week, rising five days out of five. Also, silver’s Open Interest (OI) fell during the week while price moved higher. This feels – maybe – like a “short squeeze” of some sort. When silver outperforms gold, it is usually a bullish signal. I’ve heard rumors that physical silver is hard to come by right now. It may be that the banksters are worried about having to actually deliver silver to the Commodity Exchange (COMEX) longs, and so these same banksters are cashing in/closing out their shorts at a profit while they can. I mean, maybe. (Full disclosure: I’m long silver via the Sprott Physical Silver Trust [PSLV]).

There is also the miner index, which jumped 6.60% on the week. The miners are back above the 9MA, and have moved right up to the 50. A close above the 50 (which hasn’t happened since April 2022) would be a positive possible-trend-change signal for XAU. Likewise, if the banksters think the metals will do well, the miners are the first thing they’ll jump into (and/or they’ll close their short positions also), since the miners will move the most. And on the weekly gold (XAU) chart (not shown), the weekly “swing low” candle pattern had a 59% bullish rating – a positive assessment and probable reversal. (FD: I also have a miner or two).

And for a longer term perspective on miners vs. gold, here is the GDX/Gold ratio, which reversed this week, after making a three year low last week. The print on the ratio was a weekly “swing low” (rating 73%). That’s very positive. The miners have been beaten like a rented mule since April, much more severely than gold itself; these beatings were possibly tied in with the dollar rally during that same period. Could this be the low for the miners? Could be. Of course, if equities have a major collapse, the answer is probably no, since an equity market plunge will almost certainly drag the miners down too. But we haven’t seen this low for the ratio since the big dip in 2020. It feels as though PM really does want to rally. But we might have to wait for equities to crap out more thoroughly before that happens. Then again – maybe the well-connected banksters know something we do not.

Crude was mostly unchanged [-0.08 -0.09%] this week, but that’s only because of a strong rally on Thursday and Friday. The daily candle pattern was quite positive for crude on Friday: the daily swing low pattern (not shown) had a very bullish (69%) rating, but the weekly “doji” candle was just neutral – a continuation of the downtrend. The daily chart is very choppy and it is tough to sort out the trend, while the weekly looks a lot cleaner. The weekly is suggesting: maybe no trend change yet for crude.

This week, we are back to “max looting” of the strategic petroleum reserve (SPR) by the WEF/Biden-Handlers: 7.5 million barrels. The SPR was constructed by the generations that came before us, to provide the nation an emergency oil supply for any actual emergency that came up. This came about due to the oil embargo of 1973. But for “some reason” the WEF/Biden-Handlers think they have the moral authority to empty our forefather’s painstakingly accumulated emergency reserve over the next year or so. Do we imagine they’ll refill it if/when “the crisis” passes? Of course not. Emptying the SPR is probably the goal. This will create more pressure to “buy a Tesla”, which of course you won’t be allowed to charge when the grid stops working. (Source – NYP). No Oil For You! While they fly private.

As for equities: SPX rose 3.65% this week, with a semi-bullish sector map (discretionary +5.47% along with materials +4.76% led, while energy +0.79% did worst).  Below, find a monthly chart for SPX, together with “margin loans”. When margin loans fall, typically the market drops, as leveraged longs bail out of their long positions to cover their loans, which pushes prices lower. The tiny move higher in margin loans (red line) in July (the series is delayed by a month) is not suggesting we’ve got some sort of tradable low for equities. September is not yet over. Fed meets on September 21; currently the market (Source – CME) is assigning a 90% chance of a 75 bp increase. They say you’re supposed to “sell rallies” in a downtrend, and/or “throw rocks at the wet paper bags.” [Not financial advice.]

Last thing. I was playing around with the Bureau of Labor Statistics disability data, applying various moving averages, and came up with this: a 12-point moving average (smoothing out seasonality) on the “disabled” series. It’s pretty stark. Ed Dowd tells us this is from a BLS survey, which asks: “are you, or is anyone in your household who is also 16+, disabled?” So, no waiting for a doctor’s disability note, no scams to get disability insurance. Nobody makes money off this. It is just a poll.  By eyeball, this is about 2.5 million people. Note that for each disabled person, it may be the case that a family member might need to take care of them, and be unable to work too. Think: “autistic child.”

So, is there a worker shortage? Oh yes. In the chart below, CLF16OV = civilian labor force (people working, or looking for work 16+), CNP16OV = civilian non-institutionalized population (not in prison/care home, 16+). Red line CNP = population kept growing, although more slowly in 2020. Black line, CLF = workers are about 3.5 million people shy of where they would have been historically. So, they mostly didn’t die, the red line kept rising. What happened? Disability numbers show: 2.5 million people have been disabled, while the labor force (CLF) is short by about 3.5 million from where it would have been assuming historical performance.  Could that be showing one million have died? Or maybe they’ve just decided to stop working because they got rich from bitcoin? Or, maybe they decided to retire early due to vaccine mandates? It’s hard to say. Note these series were also put through a 12-point MA, so there is a lag.

So maybe around 1% of the U.S. workforce is newly disabled. If this hypothesis correct, everyone probably knows someone who is now disabled, but wasn’t disabled before 2021. Such an abrupt decline in the workforce size is wage-inflationary. Maybe this is why we have an open southern border? Perhaps, the WEFers really were planning ahead? Just a thought.


“Health”:

‘Drinking Recycled Sewage is The Future, Don’t be Squeamish,’ Says WEF-Linked Expert (Source – newspunch).

We don’t have time to do a clinical trial….We have to do a better job communicating in simple terms what the scientific data is.” (Source – Fauci Video).  Eight mice (mostly) agree: Get Boosted! Science!

Covid vaccines will likely become annual like flu shots, White House officials say (Source – NBC). Anyone remember people being kicked off Twitter for calling COVID-19 “the flu”? Last week’s suppressed conspiracy theory, today’s White House statement.

A cardiologist says she’s seeing a rise in 20-somethings with heart arrhythmias caused by herbal supplements (Source – insider). Serious Adverse Events, normalized.

Cancers in adults under 50 on the rise globally (Source – eurekalert). SAEs, normalized.

Second person in the U.S. dies after contracting monkeypox (Source – CBS news). Two deaths nationally = “a pandemic.”

Findings from a preprint study published last month in medRxiv suggest that two doses of Jynneos generate low levels of neutralizing antibodies (Source – advisory). The underlying study is even more emphatic: “Strikingly, relatively low binding antibody levels were observed after two shots of MVA-BN in individuals without pre-existing poxvirus-specific immune responses, with poor neutralizing capacity.” (Source – medrxiv) Translation: unless you had a smallpox shot long ago, Jynneos basically doesn’t work for monkeypox.

UK Government BANS COVID Shots for Children 11 Years Old and Younger (Source – thevigilantfox); “This one-off programme applies to those aged five to 11 years, including those who turn five years of age before the end of August 2022….Subject to further clarification, on-going eligibility in 2022/23, after the one off-programme, is expected to be for children in the academic years where children are aged 11 or 12 years.” The obfuscating triple-speak, translated: they are now trying to pretend, Fauci-like, that they kinda-sorta just “one-off” recommended the shots for the under-12 group, but now that’s over. Naomi Wolf provides chapter and verse on video (Source – Daily Clout/Bannon).

Two new trials find no link between Vitamin D supplements and reduced risk of Covid-19 (Source – newswise). The trial’s endpoints didn’t involve hospitalization or death, the two key outcomes. Plus, they made sure to enroll only healthy, young people, half of one of the “control groups” took Vitamin D on their own, and the other trial participants mostly had “sufficient” Vitamin D already. Pre-ordained conclusion: whatever you do, don’t take Vit-D!

The CDC recommends everyone six months and older get a flu vaccine each year, with a few rare exceptions (Source – al.com). We must implicitly trust all the same Pharma-Attracted People (PAPs) at CDC who pretend they don’t know about Vitamin D and Covid-19. Word of the day: Pharmophiles.

The REAL Story of the Birth of ‘Social Distancing’ — the Western Term for Lockdown (封锁) (Source – Senger). Long historical article; in summary,”lockdowns” are actually an ancient/traditional Chinese response to epidemics. Which the West curiously decided to adopt.  For reasons unknown.

 


Ukraine/Europe/Depression:

Europe’s household electrical bills could surge by $2 trillion by next year amid a worsening energy crisis, Goldman Sachs warns (Source – Fortune). A replay of the 1973 oil crisis.

EU has run out of energy – Orban (Source – RT). “There are few continents in such a difficult situation as ours, but only our continent is making its own life so much harder,” Orban said, pledging to do everything “needed by the homeland.”

Italy’s Salvini breaks ranks: ‘End energy sanctions against Russia because we are on our knees’ (Source – politico). Salvini is “far-right.” He will probably also win. Election in Italy this month.

Ukraine’s Premier Wants War to End Soon as Time Favors Russia (Source – Bloomberg).

Sanctioned Russian bank bypasses SWIFT (Source – RT).

Putin’s 12,000 Tonne Gold Hoard Sets The Stage For Asian Bretton Woods And The New Moscow Gold Standard (Source – KingWorldNews).


U.S. Politics:

Dr. Simone Gold Being Released Early From 60-Day Jail Sentence for Trespassing at Capitol on Jan. 6 (Source – Epoch Times). Simone Gold: two months in jail for giving a speech. Pelosi’s husband: two days in jail for a DUI-injury-accident (Source – politico).

The left is seething at the upcoming release of “My Son Hunter,” detailing the corruption of Hunter Biden and his father, “the big guy,” (Source – armstrongeconomics). Armstrong has the trailer. Movie released September 7 – streaming  (Source – mysonhunter.com).

Working full-time no longer covers basics like rent, food and child care for more than a THIRD of families, says study, as inflation and the economy remain top priorities for voters in the upcoming midterms (Source – Daily Mail).

House Republicans Threaten Biden With the Hillary Clinton Treatment (Source – Vanity Fair). Or, House Republicans Threaten Biden With the Donald Trump Treatment.

Trump-endorsed Herschel Walker gets boost in polling, leads Warnock in close race (Source – Washington Times).

Steve Bannon Tells Charlie Kirk 35 MAGA Allies Got Raided Day of Indictment (Source – Newsweek). “The last gasp of a dying regime.”

The Perp Walk Was Great (source – gettr/Malone). “I have been texting to Steve Bannon. Here is the way he sees this, “Are u kidding me — perp walk was great !!! We are opening the show everyday to it.”

The WEF/Biden-Handler DOJ staged 35 raids on MAGA allies this week, two months before the midterms, one week after the red-lit #PedoHitler “my political opponents are semi-fascist” speech in Philadelphia, and two weeks after raiding the Bad Orange Man at Mar-a-Lago. They are losing the Hispanics, the independents, and a chunk of the Democrats; when a third of full-time workers can’t pay the bills, the actual poll numbers must be awful. (I pay no attention to the MSM poll numbers; they’re just propaganda.) The Hunter Biden story is now a movie rather than just a suppressed story in the NY Post. The Biden-Handler “policy” response seems to be using the FBI to stage raids on their political opponents to take them offline ahead of voting. Can you imagine the explosion in the MSM if Bad Orange had done something like this? They are only acting this way because they are deep in a hole, and all they can think of doing is to keep digging. That’s what they teach at the Young Global Leader school, apparently.

The pandemic is slowly grinding to a halt. The 8-mouse-booster does not look particularly well-promoted. Shots, even though the hoped-for (8-mice) antibodies wane after a few months, are now going to be “annual” events, just like flu shots. Subtext: Covid-19 is basically the flu. The Covid fear porn has dropped away to almost nothing for most; where is last year’s talk of a winter of disease and death? Gone. (I’m guessing it didn’t poll very well.) Monkeypox fear porn has diminished too; we now see that the much-hyped Jynneos vaccine probably doesn’t work. Vaccine SAEs are slowly getting wider coverage; even the UK has banned the under-12 group from getting the shot. Are we now allowed to “believe all women” about the widespread post-vax menstrual irregularities? Firebrand Naomi Wolf is leading the charge.

All the major central banks are engaged in substantially raising interest rates; the ECB has now joined the party. This, during a self-inflicted energy crisis similar in magnitude to the oil embargo of 1973. While interest rates were definitely too low leading up to this energy crisis, it is not clear how rate increases will end up producing more oil, natural gas, or electricity for those that lack energy. “Far right” Salvini in Italy appears to be aware of this – and may serve as inspiration to others in the West. I will be watching the Italian elections coming up shortly to see how they go.

And – what happened to equities during the last energy crisis?

The U.S. equity market has yet to figure this out.

Additionally, Russia appears to be preparing a gold-backed currency. That’s the signal they are sending. Will they do this? If peace doesn’t break out soon, I think there’s a decent chance they might. A gold-backed currency would have a lasting, long term impact. And for us here in the cheap seats, this would “definitely” put a floor on the price of the metal, since all a player has to do is take delivery at end of month, then launder COMEX bars through India to get the gold/Ruble price, rather than the gold/USD price. This laundering operation would be similar to China taking delivery of “sanctioned” Russian natgas, then shipping it over to Europe via freighter and pocketing a healthy premium.

Thus, I believe a gold-backed Ruble would mark the end of the COMEX control over the price of gold. For us Plebes, this could even be a tradable event. Assuming it happens.

The U.S. election is in two months. I expect “voting irregularities.” Meanwhile – got gold?  It could be backing the Ruble in not too long.

Not financial advice. But you knew that already.

– Peak Prosperity –

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