A Jobs Jamboree Friday!
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In This Issue.

* Currencies hold ground ahead of Jobs Jamboree.

* Wen signals that China may help Eurozone.

* What will the SNB do now?

* Gold looks for traction.

And, Now, Today's Pfennig For Your Thoughts!

A Jobs Jamboree Friday!

Good day. And a Happy Friday to one and all! I had to make two trips to the office this morning, as I completely forgot my laptop at home, and had to return home to retrieve it. UGH! That puts me way behind this morning. Please notice I saw I "was behind" not I "was A behind"! My beautiful bride would argue that point I do believe! HA! See. two trips to the office, and I still look for humor!

This morning, the currencies look pretty much like they did yesterday when I left the office. There's still the Sword of Damocles hanging over the euro, in the form of Greek negotiations to obtain help from private lenders. This has dragged on now for over two weeks, and I've given up on it happening. You only have to disappoint me twice before I get the message!

I think the currencies are well bid this morning, because most economists and analysts believe the U.S. Jobs Jamboree this morning, will be strong, thus fueling the global growth thoughts. So, the Jobs Jamboree is the 500 lb elephant in the room, today, so we might as well go right to it!

January's Jobs Jamboree is expected to show job creation of 140,000. You may recall that December's trumped up figure was 200,000, but as I pointed out then, I'm sure a lot of that was seasonal part-time workers. So, while 140,000 isn't going to give our economy a strong push, it's better than what we saw all of last year. The Unemployment Rate will remain at 8.5% according to the Bureau of Labor Statistics (BLS). Of course, long time readers know that I don't believe anything that the BLS prints, and prefer to use the numbers that John Williams prints over at Shadow Stats, where he believes that unemployment is really around 23%...

The thing to really watch in this report though is the Avg Hourly Earnings, and Avg Weekly Hours. This is where wage inflation shows up before most people know what's going on. I would bet that wage inflation is nowhere to be found in this report, and that's the kind of thing that the Fed wants to hear, so they can point to deflation when they implement their next round of Quantitative Easing! OK. that's just me forecasting that the Fed will do that, I don't have any inside information of the Fed Heads' thoughts. Just what I read.

So. the way the market has been dealing with the Jobs reports is that a strong report is bad for the dollar and vice versa. We'll just have to wait-n-see, but the price action of the currencies this morning, indicates to me that the markets will keep that strange perverted way of reacting to the Jobs Jamboree.

And then skipping back a paragraph. Speaking of reading. Yesterday, I found myself watching news headlines go across the screens throughout the day, for each time a looked up from what I was doing, a different headline would catch my eye. Here's a snippet of the ones that caught my eye yesterday.

1. Bernanke urges Congress to put U.S. fiscal policy on a sustainable path

2. Bernanke warns that the nation risks the possibility of a sudden financial crisis unless action is taken

3. Bernanke says discretionary spending cuts will not fill gap

4. Fed Chicago President Evans said the central bank needs a clear low-rate commitment or a third round of purchases of Treasuries and Mortgage bonds to further stimulate a still struggling economy.

5. U.S. debt balloons to $15,356,140,000,000

6. Weekly Initial Jobless Claims drop from 379,000 to 367,000 last week.

OK. let's address these and why they are important to the value of the dollar.

1. This isn't anything new here folks. Even Big Al Greenspan warned lawmakers of their addiction to deficit spending. What I do believe Bernanke was doing here though, was deflecting blame. The lawmakers wanted to chastise him for his low rate policy to 2014, and Bernanke was quick to deflect it to the lawmakers' problems.

2. Again, Bernanke is deflecting. However, he's absolutely correct here. But then he wouldn't be if there hadn't been deficit spending going on for a decade!

3. Yes, the discretionary spending cuts will not bring us back to a sustainable path, but at least they are a start! And if we continue to go along without any cuts at all, our debt will be around 140% of GDP in 2015. When we reach the point of no return, only the shadow knows, but without real spending cuts, we'll get there faster than even doom and gloomers thing.

4. This is simply laying more groundwork for QE3. And another round of QE will deep six the dollar once again!

5. When you put down all the zeroes, and all the commas, and the numbers, it's pretty daunting don't you think?

6. Long ago, I told you that eventually, companies run out of people to cut. that is without closing their doors, so eventually the 400,000 a week figures for new claims was bound to come down. but if you did it as a percentage of the working force, I would think the number would not look so good. as if 367,000 new claims last week was a "good number".

OK. that was fun, eh? This morning, the euro is holding its own around 1.3160, and that's in the face of a weak Eurozone Retail Sales for December, report that printed this morning.

I think that given the Greek ongoing saga, and this weak Retail Sales figure, the euro would be getting taken to the woodshed. However, that's not happening, and there are two reasons for that I believe outweigh the bad reasons. First and foremost. the euro is the offset currency to the dollar. if the lemmings aren't flocking to the dollar for so-called safe haven reasons, the euro gets to add to its value. and second. The news coming out of China regarding the Eurozone is promising.

Chinese Premier Wen Jiabao, who has been meeting with German Chancellor, Angela Merkel, told Ms Merkel that "China may be prepared to assist in resolving the Eurozone debt crisis" The markets are fixated on the thought that "may" is a "will". It remains to be seen if China does find a way to participate in helping the Eurozone. As I said yesterday, China will find a way, for they understand that they need to be the world's financier, if they want to have the reserve currency of the world!

Gold & Silver had very good price action yesterday, and are struggling to gain traction this morning ahead of the Jobs Jamboree. In keeping with my thoughts on the direction of Gold. I saw this in the U.K. Telegraph. "Troy Asset Management began buying gold at $450 an ounce in 2005 and now has 16pc of its £60m Troy Spectrum fund invested in the precious metal. Troy's co-manager Francis Brooke tells Robert Miller why he believes the value of gold will continue to rise. Gold will rise against heavily debased currencies."

The Swiss National Bank (SNB) is going to have to how strong their resolve is regarding the "floor" that was established for the euro/ franc cross at 1.20. The cross currently stands at 1.2045. So, it's getting close to the level that the SNB will have to do something or suffer the consequences of having the franc rise to bloated, overvalued levels once again. This will be "the test" for the SNB. it will be interesting to see how the SNB reacts now that former Gov. Hildebrand is gone.

And there was a story that I read last night regarding the Chinese renminbi. The Chief Executive of Fosun International Ltd, told reporters yesterday that He believes the "yuan (renminbi) will likely depreciate against both the U.S. dollar, and the euro this year, especially before the Eurozone debt crisis is resolved." He bases this thought on the "flight to safety of dollars that will occur this year due to the Eurozone problems".

OK. this is the first thought I've seen on the renminbi that goes that way. But, being fair, I printed it even though I don't believe in it.

Then there was this. From the Wall Street Journal. "After years of delay, Congress took a big step toward approving new rules to ban lawmakers from trading stocks based on information they pick up in the halls of Capitol Hill-a move aimed in part at helping repair the institution's low approval ratings.

The U.S. Senate was poised to pass legislation Thursday that would ban insider trading by lawmakers, after senators reached an agreement to vote on a series of 20 amendments to the bill. Brody Mullins has details on The News Hub. Photo: Reuters The Senate voted overwhelmingly, 96-3, to pass the legislation, called the Stop Trading On Congressional Knowledge Act, or Stock Act. The bill now moves to the House, where Republican leaders said they would vote on it next week.

Chuck again. OK. who are the low-lifes that voted against this? Just shows to go you that there's always people that think they are above the law.

To recap. It's a Jobs Jamboree Friday, and the markets are all expecting 140,000 new jobs created in January, not the stuff that strong economies are made of, nor what December produced, but still better than nothing! But if the markets like it, the currencies should be good today, after holding their gains yesterday. China's premier is giving signs that he will allow China to participate in the Eurozone.. And the SNB is going to have show their resolve soon.

Currencies today 2/3/12. American Style: A$ $1.07, kiwi .8315, C$ .9980, euro 1.3165, sterling 1.5830, Swiss $1.0925, . European Style: rand 7.6175, krone 5.8080, SEK 6.72, forint 221.45, zloty 3.1860, koruna 19.04, RUB 30.23, yen 76.25, sing 1.2455, HKD 7.7555, INR 48.69, China 6.3025, pesos 12.82, BRL 1.72, Dollar Index 78.91, Oil $96.89, 10-year 1.82%, Silver $33.84, and Gold. $1,755.05. and it's Friday, so let's take a peek at the Debt Clock. click here: http://www.usdebtclock.org/index.html

That's it for today. It's Super Bowl Weekend! I have to say that I'm less enthused about the Super Bowl this year, than I have ever been. Two East Coast teams, just doesn't do it for me. But since the Patriots cheated the Rams years ago, I guess I'll have to hope for a Giants' win. Two dances and a wrestling tournament this weekend for Alex, so he'll be busy! I picked up my new car last night. no biggie. just something to drive back and forth to work. but I like it! And I love Satellite radio! How did I drive without it before? HA! Ok. with the two trips to the office this morning, I'm running very late, so I'll get this out the door here.. and hope that things turnaround soon so we all can make this a Fantastico Friday!

Chuck Butler


EverBank World Markets



Posted 02-03-2012 10:51 AM by Chuck Butler
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