A Jobs Jamboree Friday!
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In This Issue.

* ECB keeps rates unchanged.

* Euro and Gold rally!

* FOMC has "other policy moves"?

* India joins other Asian currency moves higher.

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

A Jobs Jamboree Friday!

Good day. And a Happy Friday to one and all! How about that win for our Rams on national television last night? WOW! This is the first time in over 8 years, that we have a winning record (3-2) at any point of the season! So, you can understand my excitement a little, hopefully. Otherwise, you're stamping your foot and saying, Come on Chuck, get on with this letter!

Well. today's the day the markets have been waiting for. the U.S. non-farm employment data, or, as I've always called it. The Jobs Jamboree! I saw earlier in the week that the "experts" were forecasting an increase of jobs created in September of 115,000. And then after the ADP report printed their version and showed that the believed that 162,000 jobs were created, the "experts, changed their call to 125,000. When will they ever learn? The ADP hasn't given us a good indication of the non-farm number since its introduction. So, given this information, I'll have to change my earlier thought that 125,000 jobs were created and say, that only 105,000 were created.

No matter the number, 115,000, 125,000 or whatever, it's not enough! Yes, it's better than job losses, but, we can't grow our economy with less than about 250,000 per month. One of the key things to look for each month has become the data that reports the number of people that have stopped looking for work, thus in the Gov't's infinite wisdom (NOT!) they say they no longer count as unemployed. So, the unemployment rate drops, and the Gov't throws a party to celebrate, when in reality, it's all smoke and mirrors.

Long time readers know that I prefer to look at the Avg Hourly Earnings and Avg Weekly Hours Worked components of the Jobs Jamboree. And here's where we can really learn stuff, for what good does 115,000 new jobs do if they are min. wage jobs with little benefits? I know, it's better than standing in the unemployment line, but maybe it isn't. Think about that. a person's pride has to come in there somewhere, right? OK. so, this wage stuff is where I see a real problem for the U.S. workers. Wages have been pretty stagnant for a number of years now. for instance year-on-year we'll see an increase in wages of 1.8%... That's not going to keep up with inflation, folks.

OK. So, I spent quite a bit of time on the Jobs Jamboree this morning. Let's take a look at the currencies. Yesterday, I told you about the mini-rally that the euro was trading in. Well, that mini-rally lasted throughout the day, and by the time I left for home, which is much earlier in the day than I used to leave, the euro had rallied back to 1.30. And Gold had added to its $10 gain in the morning to reach its highest level of 2012 at $1,792.

This morning, the euro is still trading a bit above 1.30, but Gold has backed off $1,792, but just by a couple of dollars. Speaking of that high for the year in Gold, last year I did some research and presented it to you all, that showed how Gold's low level for each year had been its price in January. Well, that pattern is holding true again this year. yes, there are 3 months left, but once Gold hits the psychological level of $1,800, all heck could break loose. I read some research yesterday on this, and the charts show that a break above $1,800 could establish a new trading range, forming a base for Gold to test the previous highs. WOW! That's pretty bullish. and actually has something behind it rather than the reports from the Big Banks that say they see Gold at "X".

The European Central Bank (ECB) and the Bank of England (BOE) both kept their rates unchanged and didn't announce any new plans yesterday. Recall I said that the ECB had the scope to cut rates, but I think ECB President, Mario Draghi, is waiting for Spain to request Eurozone assistance before he uses one of the last arrows in his quiver. And I find that to be a good strategy.

So, the markets rewarded the euro for the non-rate cut move. That's different than I thought they would go with the news, so once again the markets have changed horses in the middle of the stream. This morning, German Factory Orders were weaker than expected, and that caused a little slippage in the euro, but not much, as everyone is focused on the Jobs Jamboree in the U.S. this morning.

Did you see the color of the U.S. Factory Orders for August? Well, in case your local or national cable news outlet didn't bring this to your attention, U.S. Factory Orders in August fell -5.9% ! That's awful folks. no wonder jobs in August were only up 96,000 (with 87,000 added by the BLS from the Birth / Death model) It's too bad this data isn't more up to date, so we could see if this data rebounded or not in September. I have the feeling it didn't, but. you never know who's cooking the books!

The Fed's meeting minutes from their meeting in September printed yesterday. All but one member voted for the new round of Quantitative Easing (QE). The actions taken by the FOMC in September were fairly aggressive and the Fed noted that if the outlook for the labor market "does not improve substantially", they stand ready to undertake further QE or "employ its other policy tools" until such an improvement is achieved. Hmmm. wonder what those "other policy tools are"? I'm of the opinion that QE is the last chance saloon for central bank policy tools. So, now I'm intrigued as to what those "other policy tools" could be. Well, not to be gloom and doom, but it's my opinion that we're going to get to see the Fed Heads implement those "other policy tools" whatever they might be!

The Commodity Currencies rebounded with the euro yesterday. These currencies that include: The Aussie dollar (A$), Canadian dollar / loonie, and New Zealand dollar / kiwi, had been pushed back earlier this week when the weaker than expected Chinese Manufacturing data printed. But they are rallying this morning, and that always does my heart some good to see these currencies rally, for when they do, the risk taking is back, and the optimism for global growth has returned.

So. which way does the dollar move today, after the Jobs data prints? Well, since the markets changed horses in the middle of the stream on us in the Eurozone, they will probably do so here to. So, I think we'll get back to conventional thinking here, and if the data is better than expected (125,000) the dollar will be rewarded, and sold if the data is weaker than expected. Since I think the data will be weaker than expected, I'm looking for the currencies to rally further today. Of course that will all be thrown out the window, should the data come in stronger than expected, which you can't rule out, given the BLS's propensity to make adjustments to the numbers.

Don't know if you've been charting the currencies in the currency round-up each day, or weekly, etc. but, if you have, you've probably noticed the gains in the Indian rupee this past week. Yes, we've seen these strong moves in the rupee before only to see them wiped out. This move doesn't really have legs to run on yet, as it is moving higher on the flow of funds into India. Apparently, foreign flows into the Indian stock market have been very large, as investors around the world look for bargains and yield. We all know these flows can be reversed in a heartbeat, so be careful here.

The Asian currencies as a whole though are looking pretty good these days, and with things in the Eurozone calming down a bit for now, these currencies are recovering nicely.

Then There Was This. All this week I've harped on and on about price manipulation in Gold & Silver. a reader sent me this story that had some great data and facts that back up what I've been saying. from wealthcycles.com. "Many know that as part of the Dodd-Frank Act, Congress directed the CFTC (Commodity Futures Trading Commission) to impose limits on speculative positions in physical commodity futures and related contracts. This means silver and gold shorting may become more difficult.

One reason this rule change is important is that institutional traders that hold large positions in commodities futures in some cases have the ability to skew the markets. For example, in a relatively small market such as silver futures, large short positions can have the effect of artificially suppressing prices. Currently JPMorgan Chase, which inherited a large short position in silver futures when it bought Bear Stearns in 2008, is believed to control about 35% of silver futures contracts--a large enough position to hold considerable sway over market prices. The Dodd-Frank rule change was intended to limit gold and silver futures positions held by a single investor to no more than 10% of the market."

Chuck again. Too bad a U.S. district judge in Washington sided with the big banks to prevent the position limits from coming into effect. The CFTC had received 15,000 letters that "generally were supportive of the proposal" So once again, the will of We The People has been pushed aside. shame, shame, shame.

To recap. It's a Jobs Jamboree Friday, and the day the markets have waited all week for. The experts have upped their forecast based on the ADP number from Wednesday, to +125,000. Chuck thinks it will be 105,000. The mini-rally in the euro yesterday, carried the single unit to just above 1.30, where it has stayed overnight and through the morning. The ECB left rates unchanged, thus giving the euro some help in the rally yesterday. The Commodity Currencies have rebounded a bit, and the Asian Currencies are stronger. Gold reached its high level for 2012 yesterday at $1,792.

Currencies today 10/5/12. American Style: A$ $1.0245, kiwi .8240, C$ $1.0195, euro 1.3010, sterling 1.6185, Swiss $1.0735, . European Style: rand 8.6075, krone 5.6785, SEK 6.59, forint 217.30, zloty 3.1310, koruna 19.1305, RUB 30.98, yen 78.50, sing 1.2265, HKD 7.7535, INR 51.85, China 6.3230, pesos 12.75, BRL 2.0185, Dollar Index 79.38, Oil $91, 10-year 1.67%, Silver $34.94 and Gold. $1,791.45 and our usual Friday tradition is to take a peek at the U.S. Debt Clock by clicking here: http://www.usdebtclock.org/index.html

That's it for today.. Well, Baseball's version of made for TV games, will take place today. I'm not a fan of this 1-game play-in game, but it what it is, and the Cardinals are playing so I'll be glued to the TV in hopes of a victory! That was some game by our Rams last night. and to beat the team that left us in 1989 ( I think) was sweet! Rams last night, Cardinals tonight, and my beloved Missouri Tigers Saturday night, WOW! For those of you keeping score at home, I'm feeling pretty good these days, the infection in my leg is still there, and reminds me of that throughout the day, but it's much better. the tumor in my mouth continues to shrink. YAHOO, I'm hoping the "magic pills" that my friend Ed calls them, are having the same effect on the tumor in my chest! So, there you go! And looky there, it's time to go! I hope this turns into a Fantastico Friday, don't you? Let's go make this a Fantastico Friday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837





Posted 10-05-2012 11:31 AM by Chuck Butler
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