Looking Under The Hood.
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In This Issue.

* Jobs Survey beats the estimates..

* Aussie March Retail Sales disappoint.

* RBA meets tonight to discuss rates.

* Norges Bank to meet this week..

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

Looking Under The Hood.

Good day. And a Marvelous Monday to you! Another wet, soggy, and colder than normal weekend here in the Midwest. UGH! The only thing that brightened it up was the 4-game sweep of the Brewers by my beloved Cardinals! The Jobs Jamboree on Friday was a surprise, but not when you look under the hood, and RBA meets tonight. Plenty to talk about on this first Monday of May, so let's not hang around here too long!

Front and Center this morning, London is closed today, and Japan was closed last night, thus taking out the overnight markets, and leaving the trading to some small centers around the world, which really didn't have the gumption to move things in one direction to fiercely. So, the currencies haven't really moved much, except for the Aussie dollar (A$), which is getting taken to the woodshed for a weak March Retail Sales report, that saw a -.4% drop in nominal retail sales for the month.

Is this report enough to get the Reserve Bank of Australia (RBA) to cut rates tonight? Good question. But in my opinion, which could be wrong, I don't think so. Remember, January and February's Retail Sales reports were stronger than expected, and therefore Retail Sales for the 1st Quarter will add .4% to GDP. I don't see how this report for March could be the straw that stirs the rate cut. But then, that's just me looking at things as a whole, and not through a peep-hole like the markets seem to do all the time.

And this time is no different. the A$ was taken to the woodshed after the Retail Sales report, and is down about 2/3-rds of a cent this morning. At this point, I would think the risk this evening and tomorrow morning for the A$ is that the RBA doesn't cut rates, and all the short sales that were put on in hopes of a rate cut, would have to be unwound, thus giving life to the A$... And, if the RBA does go ahead and foolishly cuts rates (in my opinion), one would have to think that by now the rate cut has been priced in to the A$... I guess we'll have to wait-n-see, eh?

There's another Central Bank meeting this week and it comes on Wednesday from the Norges Bank in Norway. This rate level has been a real tug-of-war for the Norges Bank. The rest of Europe has cut their rates to the bone, and Norwegian exporters have become Doug & Wendy Whiner about the strength of the krone. But on the other side of the rope, is a housing bubble going on in Norway, and a rate cut would be just like throwing gas on the fire for the housing bubble. So. I would think and hope that the Norges Bank held rates steady Eddie this week. And if the economic data continues to slow here, come back and cut rates in June.

Well, I found it all to be very interesting on Friday. Remember, that I write this letter very early in the morning. And in Friday's letter I wrote about how I didn't care for the Bank of Canada's (BOC) new Gov. for I saw him doing everything he could to make exporters happy, which wasn't going to be a good outcome for the Canadian dollar / loonie. And then later that day, I look up and the Bloomberg TV channel was running a story on how the new BOC Gov. had caused the loonie to weaken. WOW! You know, whenever I pull a story from the Bloomberg, I give them credit for the story. Do you think. Nah. that would never happen! Don't even go there Chuck!

Well, the loonie is back above 99-cents this morning, as commodities are pushing higher. The price of Oil is above $96 for the first time since the beginning of April, so the Loonie, and the other Petrol Currencies like: Norway, Brazil, Russia, and Mexico are also seeing some love this morning on the higher Oil price.

Well, we saw the color of the BLS's latest survey on job creation AKA the Jobs Jamboree last Friday. On the outside, it looked good.not pretty good. not great. But good. According to the BLS the U.S. created a net of 165,000 jobs in April. And the unemployment rate sunk to 7.5% from 7.6%... Now, you may remember, that I said on Friday morning, pre-Jobs Jamboree, that I thought the number would be disappointing, before the "adjustment" that the BLS makes each month. Well, I was bang on that! You see the "adjustment" was adding 193,000 jobs to the survey. Otherwise the job creation in April would have been negative, and we put those negative readings behind us a few years ago, we certainly can't revisit that now! Especially after 3 rounds of Currency debasement (QE)! But there it is. right there before our eyes a negative number, BEFORE the BLS adjustment.

Many, many years ago, I told you that I would rather not talk about the number of jobs created or otherwise, because it doesn't tell us what kind of jobs were created.. Could be all minimum wage jobs, and while that would be better than no job at all to the worker, it's not going to drive the economy to a stronger parking lot. But, the markets follow the numbers, and so I must report on them. But, I always attempt to give you the "other side" so at least you can see what the numbers really are.

I've long said that I prefer to follow the Avg. Hourly Earnings, and the Avg Hours worked. This is where we'll see wage inflation, or problems in the labor markets. The Avg Hourly Earnings year-on-year were up only 1.9%, so no wage inflation, but. the Avg Weekly Hours worked fell, and this rarely ever falls. And. the total amount of money earned by workers declined from the previous month. Uh-Oh. Employers have figured out to get around the healthcare tax on employers that have over 40 hours-a-week employees. Again, this is NOT going to bode well for the economy going forward, for less hours, means less disposable income that can be spent on gas, groceries and giggles!

And. don't forget what I told you on Friday. the 6 month trend in job creation was 196,000. so even with the games the BLS played with the survey. 165,000 is below the 6 month trend. Again, keeping with my call and pointing out that since March, economic data in the U.S. has shown a marked slowdown. And believe me, I not falling into the problem of just long into the economic peephole for the U.S.. I'm keeping a score sheet of the data, and if it turns around, I'll stop with my "since March the economic data in the U.S. has shown a marked slowdown" talk.

The price of Gold is up $5 this morning. The price of Gold reached $1,490 last Friday, before the price manipulators took it down $20 or so. The Jobs Jamboree saw a lot of moves associated with it on Friday, and Gold was no exception. At first glance, the Jobs data pushed the dollar higher, but then it turned on a dime, and the currencies rallied VS the dollar. But not Gold, once again, I sat there with that puzzled look that my wife says I have all the time, (HA!) and wondered out loud, why the dollar was getting sold, but Gold was not rallying.

The paper trades shorting Gold continue to be prevalent in the market, but on the other hand, so is the physical demand to buy Gold. I read a report this past weekend about how the Chinese, particularly the Chinese women, is reported to have amounted to more than 10% of annual global mined Gold output in just 2 weeks of buying. WOW! That's crazy buying, eh? Just an example of the demand for physical Gold, now that the price has dropped. Did you participate in the May Day Gold Buying? I did.

I also saw a chart that Ed Steer had in his weekend letter, that showed the number of days that it would take to in World Production to cover Short Contracts, and broke it down further by the 4 largest traders and the 8 largest trader. Gold would take nearly 60 days of production to cover the short positions of the 8 largest traders. But Silver would take 110 days of production to cover the short positions of the 8 largest traders! Doesn't this smell fishy to you?

The U.S. data cupboard is void of any market moving data this week, as it will yield only 2nd and 3rd tier data prints. In place of market moving data, the Fed Heads will hit the streets starting Wednesday and go through the end of the week. The Fed Heads will be here all week, try the veal!

Then There Was This. Any time I see an interview with former Treasury Official Paul Craig Roberts, I stop to read it. And Saturday was no exception. Ed Steer had this interview posted on his letter Saturday from King World, and it's Dr. Roberts talking about the Jobs Jamboree last Friday. After reading this, you say, "And I thought that Chuck was crazy, with his claims that the Gov't is trying to deceive us into believing everything is OK." Here's a snippet of the interview with Dr. Roberts on the Jobs report.

"Well, it's not believable. They claim 185,000 new private service jobs. They are showing jobs in retail trade. Of course the statistics show that retail sales are falling, so why are they having more employment?

They show a tremendous number of jobs in professional and business services, 73,000 (new jobs). This is not believable either. They also have 38,000 jobs in waitresses and bartenders. Now, for an economy that's not going anywhere, you won't have people hiring in retail trade and general merchandise stores where a lot of that employment is alleged to be.

My thoughts are they are desperate, and they are trying to continue this image of an economic recovery that was declared to have happened in June of 2009. But of course we've not seen any recovery.

So I think it's part of the hype that everything is fine and we are moving ahead. It's just part of the deception. The country is increasingly deceived by disinformation. That's what is going on ... There are millions fewer in the labor force today than there were many years ago. It's not believable, but the (mainstream) financial press will go along."

Chuck Again. Yes. That's about all I can say. is Yes! It's about time someone besides little old me (HA!) was beating the drum and bringing the deception to you!

To recap. The Jobs Jamboree on Friday caused some wild swings in the currencies, with the dollar being bought at first glance of the report, and then with calmer heads prevailing, the dollar was sold the rest of the day. With London and Japan closed overnight, the overnight markets were void of volume, but that didn't stop the A$ from getting sold after a weaker than expected Retail Sales report for March printed. The RBA meets tonight, Chuck still believes they will not cut rates at this time, but the RBA has proved him wrong before!

Currencies today 5/6/13. American Style: A$ $1.0250, kiwi .8525, C$ .9915, euro 1.3105, sterling 1.5560, Swiss $1.0670, . European Style: rand 8.98, krone 5.8170, SEK 6.5255, forint 225.90, zloty 3.1665, koruna 19.5570, RUB 31.08, yen 99.25, sing 1.2315, HKD 7.7595, INR 54.18, China 6.2114, pesos 12.07, BRL 2.0085, Dollar Index 82.20, Oil $96.18, 10-year 1.74%, Silver $24.23, and Gold. $1,475.10

That's it for today. Well, did you have a fun Cinco de Mayo? We celebrated by going out to breakfast with birthday girl, Toni. It's one and one for the Water Polo team in the state playoffs. UGH! Like I said above, a great weekend for my beloved Cardinals. So far so good for them, but it's a long season. Next week is the Las Vegas Money Show, where I'll be speaking twice. They love me so much they have me speak twice! Ahem. Chuck, EverBank pays for those speaking times. Oh! And I thought it was because they loved me so much! HA! Then the following week I'll be in Houston to start the week. Hopefully spring has sprung in Las Vegas and Houston! Not that I get to spend time outside, it's just a psychological thing with me! Sunny and warm puts me in a much better mood! And with that, I hope you have a Marvelous Monday!

Chuck Butler
EverBank World Markets

Posted 05-06-2013 2:03 PM by Chuck Butler