Bad Money, Bad Data, Gold Got a Cold
Bad money chased bad money today, while dusty data got more cloudy under government demolition, and even gold got dusted as the old standard, stammered.
You’ve heard the expression, “throwing good money after bad;” well, today we had an example of throwing bad money after bad. President Trump has been throwing the dollar after the Argentine peso in order to save the crashing peso. He had the US Treasury purchase Argentine pesos to help save the falling government of Javier Milei, who has patterned himself after Trump as a man to Make Argentina Great Again. The bid failed … again and again. That’s in the news below.
Dollars and pesos dying together
In spite of the bailout with US fiat currency, the peso tagged a new intraday low on Monday to 1,476 to the dollar; and with the dollar’s losses this year, relative to other currencies, that’s a pretty low standard to begin with. That was despite three purchases attempted by the US Treasury to save the peso. Seems Argentines just cannot buy enough US dollars with their falling pesos, which may be what is suddenly helping take down interest on the 10YR Treasury.
While neither government has disclosed the amount of Treasuries sold to Argentines, economists put the estimate at about $400-million worth. That plus a $20-billion standard-sized US bailout in the form of swap lines had not saved crying Argentina.
Analysts say US support, led by Treasury secretary Scott Bessent, has failed to quell demand for dollars from Argentine investors who are hedging against the possibility of a bad result for Milei at critical midterm legislative elections on October 26.
Investors are concerned that Milei may be forced to devalue the peso from its exchange rate band after the vote as the central bank’s hard currency reserves run low. The monetary authority has less than $5bn in reserves excluding liabilities.
Well, it’s hard to bail out bad money with other bad money. Bessent said earlier in the month he was buying the “undervalued” peso low so he could sell high and make money for the US government. So far, that bet isn’t paying out either. There seems to be a bottomless demand for flailing fiat dollars in the struggling Argentine economy.
Melania money
Speaking of bad money, The First Lady’s memecoin, $Melania (pronounce that “smellania” because the coin stinks), has turned out be a disastrous investment, riddled with fraud from its very origins for anyone who bought shortly after its initial rise, which happened when the president was inaugurated a day after the trick coin was issued.
That was a well-timed launch for the now-snubbed coin because the inauguration shot the data coin up in value exponentially, but the value has plunged for months since. Now we know that is due to the its fraudulent foundations:
The designers of a cryptocurrency launched by US First Lady Melania Trump in January were accused in court filings on Tuesday of organizing the operation knowing that the digital currency’s value would plummet.
In fact, it seems it did so by design.
The $MELANIA coins were released for just a few cents each on January 19, the day before her husband Donald Trump was inaugurated as president of the United States.
Within hours, the $MELANIA coin’s price had soared to $13.73.
However, it then collapsed almost as quickly, and is now only worth around 10 cents -- less than one percent of its peak price.
In newly filed court papers, investors accuse the executives of the Meteora cryptocurrency exchange platform, on which $MELANIA was initially traded, of setting up a scheme that allowed them to indirectly purchase large quantities of this virtual coin.
Their accomplices then quickly resold these digital currencies, pocketing substantial profits while causing the price to plummet….
In the latest case documents, filed in the Southern District of New York, the plaintiffs said they did not believe Melania Trump to be “culpable,” [good, because I like her] but accused the crypto companies of using her and other familiar faces as “window dressing” for their crimes.
Who could guess that would happen? No wonder the alleged fraudsters named their company “Meteora”: It flamed to a bright light then burned out quickly as it fell to earth. Getting taken by fraudsters is what happens when you surround yourself with scoundrels under a realm that always tries to push the legal envelope wherever it can and frequently pardons scoundrels, as Trump just did with professional liar and fraud, George Santos, and is courting the idea of doing with scandalous “Diddy,” both also in the news today.
When that is the company you regularly keep (along with the Epstein’s, lest we forget amid all the distractions), who could image anything might go wrong?
According to a Financial Times investigation published last week, the Trump family has pocketed more than $1 billion in pre-tax profits from several cryptocurrency-related products and companies over the past 12 months.
In addition to $MELANIA, Donald Trump launched $TRUMP a few hours before his inauguration.
And the young company World Liberty Financial, whose founders include Donald Trump’s three sons, has put the WLFI cryptocurrency up for sale for a total of $550 million.
Well, there goes my idea that the president is going to make $Trump (as in “strumpet,” and what could pay off better than a glamorous strumpet?) the new national digital currency to replace the dollar, whose decline is already assured by the Trump Tariffs … unless, of course, he retains a substantial interest in Strump. Let’s hope $Trump goes better the for US government, if it buys into it, than things went for Smellania investors, now that the Treasury has also been approved by Trump for buying cryptocurrencies. (So far as I can tell, however, the Treasury has not yet bought any $Trump. They’ll burn that bridge when they get to it.)
Gold stammered today
After months of a spectacular rally, gold fell harder than the First Lady today. It’s difficult to know whether that had anything to do with the other troubles in currencies in today’s news or was just a case of profit taking. Gold’s run has been so strong for a long time, it was time to take a rest. Even gold guru Bob Moriarty has been saying he expected to see it stage a pullback very soon. Well, here we are.
The timing of the old standard’s decline, as President Trump began to demolish the east end of the First Lady’s part of the White House, couldn’t have been more apropos as a symbol of things around the presidency coming apart under government deconstruction.
Data demolition
As the eastern end of the White House is being demolished today, so is the data that will be coming out of the White House’s number crunchers. I’ve already raised concerns that the executive branch’s upcoming inflation report will be deeply flawed, but that became a mainstream projection as well today as doubts now cloud the data like the dust now floating around the East Wing.
With the Bureau of Labor Statistics already under scrutiny this year for its broad menu of data releases, the government shutdown gripping Washington, D.C., will only raise concerns from parts of Wall Street about whether the inflation reading will present a full picture.
“Skeptics like me are going to be focused on how clean is this data,” said Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management. “What were the accommodations made for the lack of full personnel staff showing up? What adjustments were made before the data got reported?”
The devil is always in the details, and the details have always been in the adjustments, which are the devil’s playpen. However, the data collection, itself, is about as clean as the East Wing right now because Trump has been demolishing government even faster and more haphazardly than the White House (and often having to hire back many of the discards hauled away with the debris). Between the recent government shutdown, the termination of many staff members in the Bureau of Lying Statistics prior to the shutdown, and especially the lopping off of its head, Erika McEntarfer, for daring to report job numbers the president loathed to see, the data is likely a capital mess.
While the BLS inflation data has always been called “the gold standard,” I think it’s going to take a harder fall than the commodity that actually was once the government’s gold standard against inflation. What we got in the old standard’s place is a bureau that regularly reports how badly gold’s replacement is doing.
Though still considered part of the “gold standard” U.S. economic data collection apparatus, the BLS has also been criticized for its decidedly analog approach, which includes in-person visits, phone calls and written response forms.
The agency faces the added burden of staffing cuts — even before the shutdown — and has eliminated several cities from its collection efforts. Now, it is putting together a key inflation report with most of the government closed and risks that sample data could be incomplete.
Now the entire data collection process has gone down in a cloud of dust:
For those reasons, Khanduja thinks investors should be careful with how much emphasis they place on the CPI reading.
“The efficacy and the cleanliness of data — there will definitely be a little bit of a skepticism had from my end, and I’m thinking the market will do the same,” he said….
What gives this report an even higher profile is that all other data collections and releases have been suspended during the shutdown. The reason the Labor Department called back BLS staffers is because the CPI report is used to index Social Security cost-of-living adjustments.
So outside of this, there will be no other releases, leaving investors as well as Federal Reserve policymakers flying blind on data. That in itself presents a bevy of problems and another headache for agencies like the BLS.
Blind in the cloud of government demolition dust. So, now, as tariff inflation was set to kick in by my seat-of-the-pants calculations made earlier in the year, we will be flying bind with the least trustworthy figures the new “gold standard” has ever put out. And, if the numbers are actually as bad as I believe we should start to see showing up, the government will blame that on the dust cloud, too.
“I don’t think we’re going to learn a whole lot from this [CPI] data that we’re not seeing at the moment,” Mike Wilson, chief investment officer at Morgan Stanley, said Tuesday on CNBC. “I think it will give the Fed cover to do what I think they need to do, which is cut rates in a more meaningful way….”
And that, of course, is exactly what the president has been cajoling them to do for months now.
(All the news reports for today’s editorial claims can be found in boldface among the headlines below:)