A Jobs Jamboree Friday – 6/4/2010
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In This Issue..

* Euro gets beaten down again...
* Why should we do anything now?
* Brazil keeping inflation away...
* ADP says 55,000 jobs created in May...

And Now... Today's Pfennig!

A Jobs Jamboree Friday!

Good day... And a Happy Friday to one and all! I suspect this will end up being a Fantastico Friday, but right now, not so much... Today is the Big Jobs Jamboree, and the cable news stations are spinning it quite nicely. So nicely put that stock jockeys are believing the spin and running stock futures higher. I've got that to talk about today, and more debt stuff... Believe me dear reader, I wish I didn't have to talk about this debt stuff, but I feel as though me and a few of my friends are the only ones doing so, and I don't want you to become like the rest of the country and become "comfortably numb" with the deficit figures!

Well... The euro lost the 1.22 figure yesterday, but has not dropped further, holding fast to the 1.21 handle. The Commodity Currencies of Aussie, kiwi, loonies, rand, and even krone are holding steady Eddie this morning to the gains they made yesterday, that we talked about yesterday morning. The Canadian dollar / loonie, is being underpinned by the rise in the price of Oil... Yes, Oil is back to $75 this morning...

I'm reading a special piece in the FT from the other day, and the point that needs to be made about commodities is that, although we had the HUGE sell off of commodities in 2008 (financial meltdown), the fall back in prices never went below pre-boom levels... Which means... The Bull Market for Commodities is still "on"!

Well... Gold sure got caught in the crosswinds yesterday of a thought that a rebound in Global stocks will curb investor demand...

I say... Sure go ahead and sell your Gold and buy stocks, that just gives me and everyone else that see the writing on the wall  for stocks, a chance to buy Gold at cheaper prices! Thanks!

I love it when Gold dips because the dips are selling it!

And as far as stocks go? I don't know about globally, but here in the U.S. where the largest stock market resides, there are some people that I think everyone should listen to when it comes to stocks... Famous people like Richard Russell, one of the finest minds around. Mr. Russell has told his readers to get out of stocks NOW! If I were you, I would listen to Mr. Russell before I listen to Warren Buffett, who believes stocks here in the U.S. are ready to take off! (according to a story on Bloomberg)

Naoto Kan, who is the frontrunner to become Japan's new Prime Minister, said yesterday that he "has no instant fix to rein in the world's largest public debt. I don't think fiscal rehabilitation can be done overnight."

Memo to Mr. Kan... NO DOOKIE! Shoot Rudy, your country hasn't done anything to rein in their debts for 2 decades! Why start now?

You see, that's how I think the U.S. Gov't goes about thinking about the deficit... "Hey! We haven't done anything to date, why start now?"

I was reading a story on the Bloomie last night about what "the bond king" Bill Gross thinks about our deficit... He believes that the President "is poised to increase the U.S. debt to a level that exceeds the value of the nation's annual economic output, a step toward a "debt super cycle"...

Yesterday, I told you that the IMF has forecast that our deficit would reach 100% of GDP in 2012... Well, I'm here to tell you that with the deficit now reaching $13 Trillion, and the double dip I see coming, we could reach that unsustainable figure in 2011... That's next year folks!

And... Interest rates in the U.S. will go up eventually... They have to! And when they do, all those Treasuries that people bought at these ridiculously low yields will go to hell in a hand basket... Who's going to want to buy that debt then?

OK... I've got to go on to something else, as I almost got out of my chair to go yell at the wall! I don't want to get all ticked off this early in the morning on a Friday for crying out loud!

Let's talk about one of the best performing currencies for the last year and 1/2... The Brazilian real...  Brazil central bank President Henrique Meirelles was in the news yesterday talking about how the Central Bank will address inflation pressures... Let's listen in.. "We are committed to keeping inflation on target," Meirelles said today in a Bloomberg Television interview from Busan, South Korea. "We have exited from all the liquidity measures which were taken" during the financial crisis, and "we are taking the necessary steps to make sure the Brazilian economy is all balanced."

Then he said something that caught my eye... "Brazil "faced this kind of problem many times in the past," including changes in currency valuations and balance of payments, as well as fiscal problems, he said.
"We learned our lessons."

Yes, let's hope so! I, and here I go again, just when I think I've escaped that thought pattern it pulls me back in, wonder when the U.S. will learn our lesson?

OK... The Jobs Jamboree for today... The BLS has split the payrolls data to: total, and private payrolls... So, we'll want to only focus on the Private Payrolls, which are forecast to increase 180,000 for May... That's a good figure... Of course it is the BLS so we'll have to wait until it prints to see the "real numbers" as if, real numbers could come out of the BLS!

On this I have to say that yesterday, the ADP payroll report for May saw only 55,000 jobs added in May... Now, ADP provides payroll support to most companies in this country, obviously they don't have them all, but a good number of them for sure. However, they do miss the new start-ups for a month or so, and that's where the BLS birth/ death model comes in to play... If I were trying to get a "real" figure to hang my hat on, I would use the ADP print... Or... You can leave your hat on, with the BLS! HA!

The thing to look for that the media never mentions in the Jobs Jamboree is the Avg Hourly Earnings and Avg Weekly Hours Worked... These two will tell you if there is any wage inflation pressures... And from the forecasted number, there doesn't seem to be any...

Then there was this... Well... You know the Oil spill in the Gulf is getting to be a big disaster, all over the board. I could talk about the wildlife, the seafood, fish, birds, etc. or I could talk about the damage to our beaches, etc. but I'm going to focus on the loss to the economy... The Louisiana Gov. said that the moratorium on drilling will cost Louisiana 20,000 jobs in the next 12 months. But, that's just the tip of the iceberg here folks... The Oil and gas production business is going to suffer, and that will cause a slowdown in the economy, because, as we all know, from the very first oil embargo in the 70's,  oil moves the economy... And, in case you missed it, Hurricane Season began this week...

To recap... The risk takers are being quite fickle as they turn their noses up to euros, and instead opt for the Commodity Currencies, who are holding Steady Eddie this morning... Commodities remain in the Bull Market, and the forecast for Commodities is good. Gold is getting sold as people are opting for stocks... I say, let them sell, they'll be sorry... And the Jobs Jamboree is today!

Currencies today 6/4/10: American Style: A$ .8410, kiwi .6820, C$ .9610, euro 1.2150, sterling 1.4640, Swiss .8725, ... European Style: rand 7.6930, krone 6.4850, SEK  7.8660, forint 235.60, zloty 3.4155, koruna 21.34, RUB 31.20, yen 92.50, sing 1.4045, HKD 7.7915, INR 46.75, China 6.8288, pesos 12.82, BRL 1.8165, dollar index 87.11, Oil $75.01, 10-year 3.37%, Silver $17.77, and Gold... $1,198

That's it for today... The sun is rising in the East, but in the West it looks like rain... Stuck in the middle with you... Is the song that came to me as I typed that! But that sunrise is magical to me... I head out this afternoon to a weekend with neighborhood buddies at the Lake of the Ozarks... Should be a good time! The currencies are giving ground to the dollar as I get ready to sign off, I'm not sure why, given the rah-rah going on regarding the Jobs Jamboree... Oh well, it is what it is... I have to get going so I can get out of here early today to hit the road before everyone else gets on the road to the lake! I hope you have a Fantastico Friday!

Chuck Butler
EverBank World Markets

Posted 06-04-2010 11:45 AM by Chuck Butler