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In This Issue..

* High yielders rebound...                            
* Kiwi surges 2-full cents!                                 
* SNB softens tone on franc strength                                        
* The U.S. Debt Clock...                                                                                               

And Now... Today's Pfennig!

Aussie Jobs Surge!                                  

Good day... And a very cold Tub Thumpin' Thursday to you! I remember back to this summer, when in August, we were camping, and it was only 75 degrees, and old man at the country store said to me... "We're going to pay for this come winter"... I have a bad feeling right now that the old man will be bang on! UGH!

OK... A chill crept over the dollar bulls overnight, when Australia announced their latest jobs data. Since that time, the dollar has been sold, albeit not frantically, but sold nonetheless, and the high yielders, like Aussie dollars have been the main destination of those funds created from the dollar sales.

For those of you keeping score at home, Australia added 30,800 jobs "full-time" jobs last month, pushing the total in the past 3 months to 99,500 new jobs added. This figure of 30,800 new jobs blasted the forecast of 5,000 right out of the water! I think the Reserve Bank of Australia (RBA) is smiling like Cheshire Cats this morning, know that they were out in front of the curve with their rate hikes, and that this job creation, that could fuel wage inflation, will not, because of the RBA being out in front of the curve...

Could we trade Central Banks with the Aussies? No? Oh well, I tried!

I spoke at a conference here in St. Louis yesterday, and afterward I was surrounded by people that wanted to know more about the subject of diversification that I presented. The number one question, after the one where all the ladies were asking me if I were single, was did I think Australia could reach parity... Well... In my own way, I said that while the Aussie dollar had gained more than 30% VS the U.S. dollar this year, it was still about 10% below the level it traded at before the financial meltdown in August of 2008... At that time, the Aussie dollar (A$) was around 98.5-cents, so close to parity it could spit in parity's back yard... So... If the stars are in alignment, and the karma is flowing, which in other words is... If China keeps growing, and demanding raw materials from Australia, then there's no reason it can't get back to the level it traded at before the financial meltdown, and then, it's a hop-skip-and a jump away from parity!

Another often asked question to me is... OK, Chuck, you've convinced me that diversifying a portion of my investment portfolio out of the dollar is a prudent thing to do... Now, how do I pick the currencies to buy? Well, that's easy... Simply look at each currency as the "stock of that country"... And value that currency the same way you do a stock... Balance sheet, yield, leadership, ability to attract investment, and so on... Balance sheet equals their deficit or surplus, yield is yield, leadership is the Central Bank of the country, do they provide price stability for a strong currency, or do the willy nilly promote growth and forget all about price stability...

After you go through all that, you come up with a handful of currencies that meet your criteria... Most times, that list begins with... Whoa!!!!! If I listed them, then you wouldn't have to do your homework! But I can assure you that your list will be very close to my list that meet that criteria... And I'll give you one... The list will always include, Norway...

OK, enough of the lessons this morning... Well... Did you see the news yesterday that U.S. Treasury Secretary, Geithner, said the administration is extending the financial bailout program ( TARP) until Oct. 3, 2010. In a letter to House and Senate leaders, Mr. Geithner said the extension is "necessary to assist American families and stabilize financial markets."

Yes, you didn't think for a minute that the TARP money that wasn't spent, is going back to pay down the deficit did you? This is being extended so that the money can be spent accordingly! Once the Government gets their hands on money, they are not going to give it back... They will find another "need" for those funds...

And... That's too sad, folks... The Deficit spending that has been going on for the past decade is getting completely out of hand... But for those of you who still think I'm the boy crying wolf over this deficit thing, you should click here, no wait... Put away all the sharp objects first... OK, now we can click here: www.usdebtclock.org/index.html

Now... The $12 Trillion National Debt thing has been talked about by me for some time now... Instead, I want you to scroll down, and check out the U.S. unfunded liabilities... The liabilities per citizen is greater than the assets per citizen, which, if you showed that to your banker, when attempting to obtain a loan, he would say you were bankrupt...

I suggest you keep that link, and check back every now and then, but again, make sure you put away all the sharp objects before clicking the link!

OK... Back to "the stuff" for today... Well, today, we'll see the latest rot on the Trade Deficit's vine... The Big Boss, Frank Trotter, was also speaking yesterday at the same conference, and talked about the Trade Deficit, he calls it an "overhang"... For, with a recession, the Trade Deficit was supposed to go away, right? Not so fast my friend! There's this little thing called Oil, that we use whether we're in a recession or not! And... Given the fundamentals in the U.S. the dollar, to me, and probably to every foreigner that looks at U.S. exports, is still overvalued... Get that dollar down to a level that allows U.S. exports to be competitive, and you'll see some traction in the Trade Deficit, but make it go away completely? No way! Not unless we, as a country, decide to stop using oil, and go nuclear!

We'll also see the Monthly Budget Statement, which is more important these days, for all of the deficits we keep adding to the national debt. Last month, the Budget Deficit was $125 Billion... The forecast for this month is even worse, at $131 Billion!

And with it being a Tub Thumpin' Thursday, we will have the Weekly Initial Jobless Claims print as usual. Last week, the jobless claims fell below 500,000 for the first time in a month of Sundays... But again, one has to ask themselves if as a country, we have cut so many jobs, that we've come to a point where there just aren't that many jobs left to cut, if the country is going to remain working at all...

Tomorrow is Retail Sales day... The Butler Household Index (BHI) tells me that while Retail Sales will be positive, they won't be "celebration time, come on!"... This data will include the Black Friday, after Thanksgiving sales, so it shouldn't be too bad!

Enough of the data, Chuck, these people are getting bored!

OK... Hey! The Reserve Bank of New Zealand (RBNZ) met last night and left rates unchanged as expected... But... The RBNZ dropped that stupid insistence they kept making that rates will remain low until the second half of next year... Instead they said that "conditions" may support removing the stimulus of low rates around the middle of 2010... That's HUGE folks... For... While the Fed may be ready to raise rates by then, they aren't saying they are... In fact, Big Ben Bernanke just said the other day that the low rates would remain in place for some time...

So... Kiwi jumped from .7070 yesterday, to... Drum roll please.... .7280 this morning! WOW! A full 2-cent move overnight!

I always say the interest rate differentials aren't the "end all" for currency valuation, but they can go a long way! And its obvious that Australia and New Zealand are in the camp of "they can go a long way"!

The other Central Bank to meet yesterday was the Swiss National Bank (SNB) and here... Central Banker's words were taken to mean that the SNB is backing off their previous statement of doing whatever is necessary to keep the franc from appreciating VS the euro...

The SNB Gov. Roth, said that the "SNB will continue to act decisively to prevent any "excessive appreciation" of the franc against the euro." The key here is the word "excessive"... In other words, the SNB wouldn't mind seeing the franc slowly move higher VS the euro...

And while that's going on, the franc continues to bump up against parity to the dollar...

The Bank of England (BOE) is meeting this morning... Talk about a mess... I wouldn't want to be in their shoes! The BOE has painted themselves into a corner, and the only way out is to get paint all over themselves... With the paint being bad, very bad things...

I know that the pound sterling has been quite resilient in recent months, but I truly believe this is a just a by-product of the dollar weakness overall, and not any endorsement whatsoever of pound sterling or the U.K....

Oh... The BOE just announced no rate move... And a continuance of their Bond purchase plan... Quantitative easing folks... Like I said, they are in deep dookie...

And finally, Brazil's Central Bank met, and kept rates unchanged... I found this to be a little questionable, given the Brazilian economy grew at 1.3% in the previous quarter, during a global recession! The Central Bank also said that rates would remain in place for "quite awhile"... UGH!

That's not surprising though, when you go back and listen  to the words of the Central Bank Gov from a few months ago, when he stated that he would do everything in his power to keep the real from going below 2 VS the dollar... And the real immediately did go below 2, and has stayed there for months now... So, why would the Central Bank Gov. look to raise rates, and make the real even more valuable?

He'll have to raise them eventually... I'm sure he can see the writing on the wall...

Gold is down another $5 this morning to $1,123... A man sitting at my table asked me why Gold had fallen so much the past week, and I said, "because it had gained so much the weeks previous to last"... Think of it as "healthy" for Gold to come back like this... And... Look at it as an opportunity to buy at cheaper levels!

Then there was this... Well... We closed out our last BRIC MarketSafe CD yesterday... It was the most successful MarketSafe we ever issued...

To recap... The Aussie jobs data was very strong, and lifted the high yielders to a strong overnight performance VS the dollar. Kiwi was the overnight winner, as the RBNZ softened their tone on the next rate hike, and the Swiss National Bank softened their stance on franc strength...

That's it for today... A great conference yesterday, hosted by my new friend, Rebel Wheeler... I appreciate her having the conference here in St. Louis, so I could attend, and speak... One week from today, I'll be starting my winter vacation... YAHOO! Guys Day out "shopping", the Butler House Annual Christmas Party, and more are waiting for me to start my vacation! Our poor Christmas decorations in the front yard sure took a beating from the wind yesterday... The deer were blown over to the ground, looking as though they had been shot! My little buddy, Alex, had his school, jazz band concert last night. Little Delaney sat on my lap for part of it, and clapped, and yelled Yay... She was so excited! It's amazing what these school band directors do with these kids, whom most never played an instrument before 2 years ago... They were good! OK... Time to go... The wind has stopped somewhat, but the cold is here! I hope you have a Tub Thumpin' Thursday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 12-10-2009 9:37 AM by Chuck Butler