Jobs Disappoint. Again!
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In This Issue.

* The so-called Flight to Safety.

* A$ holds its own.

* SNB has to be selling francs.

* Eurozone exports soar!

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

Jobs Disappoint. Again!

Good day. And a Marvelous Monday to you! Yes. here I am! After a week of recovering from one nasty cold, a holiday and then planned vacation days, I'm back! Sorry about the bummer news from Thursday. I wish I never had to do that, or ever do it again! I want to say a great big heartfelt thank you to everyone who responded to the Thursday news with thoughts, wishes, and prayers. They are, and will always continue to be Truly Appreciated!

But life goes on, and doesn't stop for anyone, so let's get to the markets and see what Mr. Market has up his sleeve for this morning. Front and Center this morning, we had the Jobs Jamboree last Friday, and once again, the jobs created the previous month were a disappointment. Folks, the forecasts alone were disappointing, but then the totals were even more disappointing! The forecasts were for 100,000 jobs to have been created, the actual was 80,000. Of course I use the word "actual" loosely, because it is the Bureau of Labor Statistics (BLS) we're talking about here that totals up the numbers. They have been known to fudge the numbers a bit. In fact, for June, the BLS added 124,000 jobs out of thin air. In fact, that makes over 500,000 jobs added by the BLS in the past 3 months. You can do the math. without these "ghost jobs", the employment data is even worse than stated, and stated, is pretty darn bad!

So. going back to the way things were circa 2008-2011, whenever the economic data from the U.S. was bad. the markets would reward the dollar, yen, (used to reward Swiss francs), and Treasuries. They call this a Flight to Safety. Safety my. Whoa There Chuck! You can't say that! This is a "family letter"! OK. I didn't say it, but I'll bet a dollar to a Krispy Kreme that everyone knows what I'm saying! Hopefully those boarding this "Flight to Safety" are only doing so for the short term.

The euro has been sent to the woodshed and rightfully so. But remember this. The euro was sent to the woodshed in 2005. Again in 2008, again in 2010, and somewhat at the end of 2011. and each time when things looked bleak, and most people wouldn't touch euros with someone else's 10-foot pole, the currency showed its resiliency and rebounded. Now, just because that happened those 4 times in the past doesn't mean it will for sure do so again now. It just was a reminder of the resiliency.

Speaking of resiliency. Eurozone exports for May flew past the forecast of .2%, and posted a 3.9% increase in exports VS April! So, the exporters in the Eurozone, are saying, "go ahead and mark down the euro, we'll increase exports!"

The Aussie dollar (A$) while it did see selling last week in conjunction with the euro sell off, has retained $1.01 and I did read that some foreign investors were seeking safety in the A$ instead of the dollar, yen, and Treasuries. Remember, when I wrote about how I looked at the A$ as the new Swiss franc?

On a side bar.. I used the word conjunction above, and I immediately started singing, Conjunction junction what's your function? Hooking up words and phrases and clauses. Schoolhouse Rock. whatever happened to that?

OK. sorry, but you never know what tangent I'll go off on. OK. back to Mr. Market. I'm reading and hearing some rumbling from the primary dealers (you know the ones that get to deal with the Fed). You see, the Fed extended their Twist & Shout, I mean, Operation Twist, where they sell short term bonds, and buy longer term bonds in an effort to keep mortgage rates low. But, they need the Primary Dealers to play ball with them. I read this weekend that the Primary Dealers offerings to the Fed of the long term bonds were down 40% from their highs back in October. Hmmm. seems that these Primary Dealers and others that deal with the Fed are choosing to keep their long term bonds rather than sell them.

And on top of that news, is the news that a Reuters poll of Primary Dealers shows that expectations for QE3 have jumped from 50% last month to 70% after the disappointing jobs data last Friday. August or September, which is about when I thought we would see this all come down, due to the weakness in the economy, and. the Presidential election campaigns. and. let's not forget that around this time, we'll be experiencing another debt ceiling debacle, which I would think, given the election year, would be even more of a beat down than last year's debacle.

So, that makes getting through the "dog days of Summer" even tougher. because we'll be waiting for all this to take place, and the days will drag on. Speaking of August. The first week of August has traditionally been the Butler family vacation time. We will do an abbreviated version of that this year, with half the family. Can't wait! My long time friend and co-worker, Jen Mclean is on her family vacation this week, which means Chuck is nailed down to his seat for the week!

This scandal that has been discovered regarding the fixing of LIBOR rates is really something, eh? First of all LIBOR stands for the London Interbank Offered Rate. The Economist magazine says that "as many as 20 big banks have been named in various investigations or lawsuits alleging that LIBOR was rigged" I'll tell you my take on the whole thing. These Big Banks don't really have a lot of public credibility right now, and this makes things even worse! One of these days we'll be reading about another scandal discovery, and it will be regarding the short positions that the bullion banks have in Gold & Silver. mark my words on that one, folks. one day, it will happen. Apparently one whistle blower, which we had, isn't enough for the CFTC (the regulators). But when the public finally stiffens their back, and demands answers of their lawmakers, then. and only then will we get to the bottom of this scandal.

This past weekend, Ed Steer, posted an article written by Jim Sinclair regarding this scandal. Here's a snippet of that article, but it says it all. "Anyone who does not see today's gold market as a rig is blind or brain-dead. All the lining and conniving mean only that the price will go higher. Just as Morgan's "whale" count not fight the markets, the cartel cannot fight gold as we have a flight away from all fiat currencies." - Jim Sinclair, mining entrepreneur, market analyst, and gold trader.

So. since I mentioned Gold & Silver. JMR Doug, sent me a Mogambo Guru T-shirt. tre' cool! It has some classic Mogambo lines on it like: "This Investing Stuff is Easy, whee!" And highlights the Mogambo's fave investments. Gold, Silver, and Oil. and of course it wouldn't be a Mogambo shirt without his famous line of: "We're all freakin' doomed" I can't wait to wear that on the patio, and explain to my drinking buddies what it all means! Of course they've heard it all before, so many times, they steer me away from any conversation about markets, economies, or debt.

I see that Gold has slipped below $1,600 again. I read this past weekend that $1,630.00 seems to be the line drawn in the sand for Gold. Hmmm. Somehow, I'm not buying that as a long term line in the sand.

In an ever-apparent election year move. The U.S. President is expected to ask congress to pass a one-year tax cut extension for individuals earning less than $250,000 a year. I don't mention this to talk politics. I mention this, because. the U.S. is drowning in debt, and one way you can throw a rope toward debt, is to increase the revenue. which means higher taxes. and while I'm not wishing and hoping and thinking and praying for higher taxes, I feel that they are unavoidable. and so, I would prefer we begin to bite the bullet now, rather than making moves like this, which has no use. not when unemployment is 23%... and such a large number of people receiving government assistance.

OK. The Swiss franc continues to get sold, and I would think that the Swiss National Bank (SNB) is behind the selling. The SNB is selling francs to keep the cross to the euro from getting out of whack. When the euro dropped 2-cents last week, the franc had to keep in step or have the 1.20 cross rate ceiling become an issue.

The Chinese cut interest rates again last week. Chinese Premier Wen Jiabao said that, "downward pressure on the economy is still relatively large and the government will intensify its fine-tuning of policies to stabilize the slowdown." Now, I know I've been gone a lot lately, but remember what I told you a couple of weeks ago, that a Chinese advisor, said that the Chinese economy had bottomed in the 2nd QTR. The real worry here is just how low that "bottom" is. it will probably be the lowest in 3 years. Chinese observers are reporting that the stabilizing moves made by China already are beginning to show some results. So, the key here is for the markets to not panic, when the 2nd QTR GDP prints. But, I'm sure they will. So, the opportunity here is that the renminbi / yuan is going to be cheaper.

I had sent a note to Chris last week about Canada's manufacturing and the overall appearance of a stronger domestic demand in Canada than here in the U.S. The Bank of Canada (BOC) is once again highlighting the growth in the economy and in jobs, and saying that interest rates might have to be increased. But the markets aren't buying it. fool them once but not twice. Recall that the markets got all lathered up over remarks that BOC Gov. Carney made about hiking interest rates, only to not have that come to fruition. But, that's OK. I still like Canada. the Banking sector is second to none, they have commodities that other countries want and need, and good domestic demand. The results may not show in the Canadian dollar/ loonie right now.

Then There Was This. speaking of rising tax burdens for U.S. consumers. I saw this in the Washington Post, and was really ticked off, but then that's because my beautiful bride buys almost everything over the internet!

"U.S. states increasingly are enacting laws to require shoppers to pay sales tax on Internet purchases. A bill under consideration in Congress would make online sales tax the norm nationwide. For states struggling in the troubled economy, this could mean $23 billion in new revenue each year, according to the National Conference of State Legislatures."

Chuck again. Yes, get ready. the tax burdens to deal with our debt are coming. And in 2001, when I started screaming about rising debt, and have screamed so loud about it for over 10 years now, so much so that my voice is about gone, I warned people that this is what would come for us, our kids and grandkids. but, back then, it was popular to say that deficits don't matter. I guess they do now, eh?

To recap. the currencies got taken to the woodshed on Friday, after the Jobs Jamboree was so disappointing. The so-called Flight to Safety was intact. That trip to the woodshed has carried over to this morning's trading, but not as harshly as last Friday. The A$ has maintained $1.01 and that kind of confirms my claim that the A$ is the new Swiss franc! And the taxes are coming. are you ready?

Currencies today 7/9/12. American Style: A$ $1.0175, kiwi .7940, C$ .98, euro 1.23, sterling 1.5490, Swiss $1.0240, . European Style: rand 8.2920, krone 6.1020, SEK 7.03, forint 235.40, zloty 3.4445, koruna 20.7715, RUB 33, yen 79.55, sing 1.2715, HKD 7.7550, INR 55.94, China 6.3710, pesos 13.45, BRL 2.0275, Dollar Index 83.25, Oil $84.80, 10-year 1.51%, Silver $27.27, and Gold. $1,584.35

That's it for today. We had little Braden Charles almost all weekend, as his parents were away. He's so darn cute, and a kissing machine! It was fun to get him out of bed yesterday morning and bring into our bed, and play with him. Old time memories there! Cardinals send 5 players to the All-Star Game that will be played tomorrow night, with the Home Run Derby tonight. We finally got a break from the 100+ degree days this weekend, when some much-needed rain arrived. Temps are supposed to stay below 100 this week, so we've got that going for us! After Saturday's 107, Alex, who works outside, was rethinking his will to work outside! He was beat when he came home. But that's good for him, he's 17! When I was his age I was outside in the Oklahoma sun building in-ground swimming pools, so I know what he's feeling. OK. gotta go! Sorry to carry on so much here at the end, seems like it's been awhile since I talked to you. I hope you have a Marvelous Monday!

Chuck Butler


EverBank World Markets



Posted 07-09-2012 12:01 PM by Chuck Butler
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