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In This Issue..

* Will -533K turn to -600K?

* A glimmer of light brings back risk takers...

* Another week of data...

* Fedspeak today...

And Now... Today's Pfennig!

The Worst Jobs Report Since 1974!

Good day... And a Marvelous Monday to you! What a Whirlwind Weekend for your truly, as it came and went, I did a ton of stuff, but no rest, and this morning, I was reminded that I had not gotten any rest! UGH! But! It was all fun! A great time in Jacksonville at the Headquarters' version of a Holiday Party... It was great to see the folks there that I know.

OK... Did you see the rot on labor's vine Friday? The Jobs Jamboree was very unkind to many, with a 533K jobs lost in November. That number was the worst figure since 1974! The tally of 1.9 million jobs lost this year surpasses the losses of the past two recessions, and according to the Wall Street Journal, signals that the current downturn could be the worst since the years immediately following World War II.

The unemployment rate ticked up to 6.7% from 6.5%, a separate Labor Department survey showed, the highest rate in 15 years. But the jobless rate -- which is based on figures of people looking for work -- was contained by the ranks of discouraged job-seekers giving up their searches. A broader government measure of unemployment, which includes those who want to work but are no longer actively seeking positions, jumped to 12.5% in November from 11.8% a month earlier.

Now... The thing that really ticks me off folks, is the fact that the October figure saw a major revision. You might recall that the September figure which was bad enough, was revised up by over 100K... Then last month we saw a negative -240K figure, which was bad enough, but one month later the figure is revised up to -320K... So, in my mind, the -533K figure reported this month for November, will probably be revised upward to the -600K figure... UGH!

So... All that rot, and the currencies hardly noticed! The trading range for the day was very tight, with a bias to sell dollars. In the overnight markets, the bias to sell dollars has really caught some wind in its sails. I'll tell you this, so hear me now and listen to me later... But the markets are really becoming predictable. You see, any time it appears there could very well be a light at the end of the tunnel, the fundamentals come back into focus (somewhat, because if they really came into focus, we would see dollars selling like funnel cakes at a State Fair), and the dollar gets sold.

The markets think they see a glimmering light this morning, as it appears the Big 3 will get some cash from the Gov't... Probably not as much ($40 Billion) that they wanted, but more than they originally asked for ($25 Billion)... I heard that they were bickering over whether they would accept having an "Auto-Czar" named by the Gov't, placed over them and to allocate the money... They should simply take the funds and be happy they got them!

This glimmering light always bring with it a chance for the high yielders to rebound, as risk takers stick their toes back into the chilled waters of Carry Trades. And that's exactly what we saw overnight, with the Aussie, kiwi, real, and rand all with strong rebounds VS the dollar. The glimmering light also lets Gold shine. So, the Commodities and the Commodity currencies all look better this morning. But, while I was typing the above, I had to laugh at my reference of Aussie and kiwi as "high yielders"... The way their Central Banks have been slashing rates, it amazing they can still hold up the "high yield banner"... But with the Big 3 of U.S., U.K., and Japan all with either zero rates and rates falling to zero, 3&4% yields look pretty lofty, eh?

And speaking of the risk takers coming back into the markets... It is really illustrated with the Japanese yen falling from 91 to 93 since Friday morning... I've explained all this before, so I won't bore every day readers with that again... If you want more info on this, you might want to check out the Pfennig's web site: where you can find today's letter, along with 6 months worth of archives... You'll probably find lots of Pfennigs that have full disclosure of what's going on here...


I saw this story on Reuters that really caught my attention... "One of the top managers of China Investment Corp, (CIC) the country's $200 billion sovereign wealth fund, reckons current dollar strength is temporary and he would like to bet that the U.S. currency is headed lower.

CIC President Gao Xiqing said in an interview with monthly U.S. magazine The Atlantic that," Everyone is saying, Oh, look, the dollar is getting stronger! I say, that's really temporary. It's simply because a lot of people need to cash in, they need U.S. dollars in order to pay back their creditors. But after a short while, the dollar may be going down again. I'd like to bet on that!"

Sounds like Mr. Gao and I would be good drinking buddies, as we think the same way! I wonder if he would like to take on the Cardinals as his baseball team?....

Speaking of drinking buddies... Here's another one that would probably fall into that category... Here's another story on Reuters... "Foundations for the dollar's recent rally have not been solid. The result of repatriation, deleveraging, quantitative easing and a major scarcity of dollars," said Bob Sinche, head of global FX and rate strategy at The Bank of America in New York. "But now we are bound for a correction."

Now, if you ask me (and I know you didn't, but you probably would if you ran into me, and I said, Hey! Would you like to ask me a question? HA!) but if you ask me, it sure seems as though these two guys could be Pfennig readers! But it would be better if they are not... For if they are not, then that means they're seeing things the same as I do, and not just using the Pfennig for their fame and fortune! HAHAHAHA HAHAHAHAHAHAHAHAHAHA!

So, after all the rate cuts last week, the Fed still gets their turn at the rate cut table next week, and I don't expect the Fed Heads to disappoint the rate cut campers in any sense of the imagination! And this could be the one that really brings the fact that yield differentials "SHOULD" be in play, and that the dollar "SHOULD" be in trouble... I'm really thinking that we could see a Santa rally for the currencies from here to the end of the month... Now... That's just me thinking out loud... I did NOT tell anyone, nor give advice to anyone to go out and buy euros today because I said there was going to be a rally! Of course, I could give you the wink and nod, but then you wouldn't see it because I can't physically wink and nod here in the Pfennig!

OK, I carry on, but it just gets me to no end... Advice... Yeah... Well the only advice I do give people is to love their families and friends, for in the end, that's all you've got! That, and the fact that investors should diversify their investment portfolios, so that not all of their investments are dollar denominated. Just like real estate's key word is "location"... Investing's key word is "diversification"...

In the "sign of the times" that I've been detailing lately... The Wall Street Journal reported that Merrill Lynch's CEO, John Thain, has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered securities firm's compensation committee is resisting his request.

And... The Tribune Company is preparing for a possible bankruptcy-protection filing as soon as this week. (I could say that I guess this isn't a good time to bring up all the millions they spent on Kerry Wood and Mark Prior... ) (and yes, I know, that wasn't playing nice with my Cubs friends)...

And... U.S. President-elect Barack Obama's pledged to create the largest infrastructure spending package since the 1950s to revive the economy.

The data cupboard will yield some interesting data this week for us to chew on... Like the Monthly Budget Statement (deficit), and the Trade Balance (deficit), and Retail Sales... The Retail Sales figure should remain pretty disappointing. A quick check of the BHI (Butler Household Index) tells me that! I tried to help the BHI, but that was last week, in December... So, in the end, there's more awful data to deal with, and by the time the Retail Sales figures are printed on Friday, this week, the glimmer of light provided by a deal with the Big 3, will have faded, and we could begin to feel pretty gloomy and doomy again.

But not me! I begin my Winter vacation on Friday... And I can guarantee you that I will not be checking on Retail Sales on Friday, as this is our "guys shopping day"... All the "guys" read the Pfennig, so I hope they are ready to go this Friday!

We get some "Fed Speak" today from Mssrs. Kroszner, Rosengren, and Kohn... They'll most likely be setting the table for the FOMC meeting next week...

Currencies today 12/8/08: A$ .6635, kiwi .5435, C$ .80, euro 1.2865, sterling 1.4865, Swiss .8250, ISK 261, rand 10.24, krone 7.08, SEK 8.12, forint 205.70, zloty 2.4450, koruna 20.02, yen 93.26, baht 35.54, sing 1.5090, HKD 7.7510, INR 49.59, China 6.8808, pesos 13.47, BRL 2.4410, dollar index 86.08, Oil $42.75, Silver $9.76, and Gold... $769.88

That's it for today... Well... My beloved Missouri Tigers got spanked by big bad Oklahoma on Saturday night. I saw the game with the score 10-7, and didn't see any more, only heard the final score. UGH! They're still going bowling though... Alamo Bowl, in San Antonio, TX... Not what they hoped for at the beginning of the season, but better than the football depression of the 90's! the folks in Jacksonville were all happy about their Gators... Got my first ever hug around the neck from little Delaney Grace last night. She gives them to Alex all the time, but this was the first one for me! She's so darn cute! I noticed the other day that the readership of the Pfennig had grown by about 3,000 readers in the past couple of months... So... Welcome... Well, Mike and Mary have arrived, Geez Louise, I'm getting later every day! YIKES! Oh well, I do my best... I hope you have a Marvelous Monday!

Chuck Butler


EverBank World Markets



Posted 12-08-2008 9:10 AM by Chuck Butler