It's a Jobs Jamboree Friday!
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In This Issue.

* Currencies remain in tight ranges .

* BOE & ECB leave rates unchanged.

* Norway's SWF adds to pension balances .

* China's Trading moves to #1! .

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

It's a Jobs Jamboree Friday!.

Good Day! And a Happy Friday to one and all! It's a touch and go morning for me, just so you know, in case I have to split and call Mike in from the bullpen! But right now, it's all good, so let's get to the letter this morning! Today is a Jobs Jamboree Friday, so right out of the starters blocks this morning we could have some real excitement! (that is if you get all excited about a report that has been massaged, rolled, and over-cooked)

Pardon me if I fail to get excited about such stuff. I told you a couple of months ago, that I had become so disinterested in the Jobs Jamboree, and it could now be filed with the CPI (consumer inflation) report under the heading. Too Many hedonic adjustments to give a hoot about! But the report is there, so as my grandma used to say, make some lemonade from those lemons! Well, I think the jobs created, or made up by the BLS, will be around 200,000 for December, but the real meat of the report can be found in the Avg Hourly Earnings and Avg Weekly Hours, along with the Labor Force participation rate. The first two give you indications of the strength of the economy and inflation, and the 3rd one tells you the real story and one that's not "played with" like the Unemployment Rate.

So, with the Jobs Jamboree looming this morning, currencies remained in a very tight trading range yesterday and the in the overnight markets. But the bias to buy dollars, just in case there's a crazy jobs number today, remains in place. Gold is up $5 this morning, which plays right into the thought about a crazy jobs number. Here's the skinny on that thought process for the traders folks. Basically, if the U.S. is creating more jobs than you can shake a stick at, inflation and wage inflation to boot, will not be far behind. And what asset do you want to own when inflation soars? Did I hear you say Gold? Ahhh, grasshoppers you have learned well!

Fed Head Kocherlakota was spreading the gospel of being a dove last night. Kocherlakota was in the mood to warn everyone that the improvement in the labor market was "disturbingly slow" and that by "easing monetary policy relative to its current stance, the FOMC could facilitate a more rapid fall in unemployment and a more rapid return to 2% inflation." And then on the Bloomberg I found some quotes from a closed door meeting with Senators and Big Ben Bernanke in attendance. Apparently, Bernanke was arguing against implementation of any strong austerity measures. Really? I thought that all the time that Big Ben was the Fed Chairman, he would warn the lawmakers about their spending and the rise in debt? But now that he's on his way out, he doesn't see any problems that need to be corrected with the debt? Excuse me for a minute while I go yell at the walls!

OK, I'm back now. So, with the currencies stuck in the mud (tight ranges), there's not a whole lot to talk about, and the U.S. data cupboard is chock full-o-data, but it's all related to the Jobs Jamboree. But that won't stop me from talking, folks. I always have things to talk about when it comes to currencies, metals, economies and Central Banks!

And with that, our metals guru, Tim Smith, sent me a link to a story that plays well with my call from several years ago, that Norway was the most sound fundamentals-wise country. Well, for years I told you about how there's a fully paid pension for every Norwegian, and a few years ago they began to fund for yet to be born Norwegians, so that when you come into the world, you already have a fully funded pension. Well, the story Tim sent me adds to that thought, now, according to The Daily Mail in the UK, "Norway's sovereign wealth fund has ballooned so much that every person in the country became a theoretical millionaire this week." The surplus payments from the Fund, are paid to the Gov't Pension Fund, and now the website of the Central Bank (Riksbank) who manages the fund, has reached the equivalent of 1 Million krone for each person. WOW!

So, while most countries in the world are dealing with debt up to their eyeballs, Norway sits on piles of cash, and then makes sure they don't willy nilly spend it on pet rocks or whatever the latest craze for countries is.

And as I've said for quite some time now, the krone is not the euro. The Eurozone is still fighting the battle of the bulging debts, while Norway's Sovereign Wealth Fund continues to grow. And knowing this, one would think the markets would treat the two currencies, krone, and euro separately. But for now, krones get tarred with the same brush that's used on the euro. I believe that one day traders will wake up, do a V-8 forehead slap and say, Hey! The Eurozone is not Norway, and we shouldn't be treating it like that! But until that day, we carry on.

The Swedish krona is stronger this morning on the news that their Nov. Industrial Production printed a moon shot number VS the forecast. Nov. Industrial Production increased by 5.7% in November, VS 1% forecast. And completely reverses the October -2.8% print. The gain in the krona is tempered due to a widening of their Budget Deficit which came in at 96.6 Billion krona in December, which in dollar terms is around $15 Billion. Geez Louise, I don't like to see that Deficit rise like that, but let's keep this in perspective. Sweden is doing quite well right now, as witnessed by the Industrial Production print, so, tax receipts could very well wipe out that relatively small deficit in a heartbeat!

Well, both the Bank of England (BOE) and the European Central Bank (ECB) left rates unchanged, as I suspected they would. I was surprised at the reaction of each respective currency to the news. First, the BOE left rates unchanged, but changed their forward guidance on the Unemployment rate to 6.5%, which would be the level at which the BOE would look to hike rates. To me, this is moving the goal posts, and if I were a pound sterling trader I would have been selling the currency like funnel cakes at a state fair! But that's not what happened. Now, the pound sterling didn't exactly rise like biscuits in an oven, but it didn't sell off either, and THAT was surprising to me!

Then the ECB also left rates unchanged, but Draghi decided to let everyone know that ALL the tools available to him under the Maastricht Treaty are on the table, including Quantitative Easing / QE. Oh brother! By the reaction of the traders to that statement, on euros, you would have thought that he said, he was implementing QE, not just pointing out that it was available to him! And he's gone through this talk about all the tools being available to him before, so this was no surprise.. Now, to me, what was more important was Draghi talking about how inflation risks in the Eurozone is still "balanced". And it is my opinion that as long as the ECB and Draghi believe that about inflation risks, then there will be NO QE! But traders didn't see all this that way, and took the euro down on the statement.

The Chinese renminbi / yuan got back on the appreciation tracks last night, with a nice sized appreciation in the currency. Two steps forward, 1 step back, is what it seems with the renminbi/ yuan. As long as the steps forward outnumber the steps backward then I can live with that! I see that my friend, and writer/ publisher extraordinaire, Bill Bonner, is on board with my thought that the renminbi takes away the dollar's reserve status. And why wouldn't he? Or anyone else for that matter? The facts are there, that the Chinese are taking the steps to put their currency at the head of the class, and now it's just a question of when they are ready to take the final step of allowing the renminbi to float.

Well, there are growing thoughts once again that the Swiss National Bank (SNB) wants the franc weaker still, and would look to move the floor in the cross to the euro from 1.20 to 1.30 or 1.35. Right now, these calls are very weak, but that's how things begin, folks. Whispering campaigns can eventually become policy. But then these rumors have been shuffled around for over a year now. So, here's my memo to the SNB. If you're going to do it, do it, and get it over with!

The Indian rupee continues to inch back the credibility and value it lost last summer. This has been the best week performance-wise for the rupee in over a month. The general outlook for the Indian economy is upbeat for the first time in a month of Sundays, folks. Exports are rising (+3.5% in Dec) and imports are falling, which is manna from heaven for the troublesome Indian Current Account Deficit. India is still working on adding more reforms to the ones they implemented in the fall, that have led to this upbeat outlook for the Indian economy. This will all be right on the night, as long as the reforms (we talked about them months ago) are allowed to remain in place, and the Indian Gov't doesn't decide to get their hands into the cookie jar and upset the applecart. That's the normal course of business in India, but there's always hope that can change, eh?

And don't forget that there will also be a jobs jamboree in Canada today, as they will print their latest labor reports. These reports have been very volatile in numbers in recent months, and I expect the report be disappointing compared to the forecasts of 14,100 jobs added. The Canadian dollar / loonie continues to weaken and head to a 1.10 figure which in dollar terms is just below 91-cents. Not parity for sure, but still well above the 65-cents figures that the loonie used to own, years ago!

Well, yesterday, the U.S. data cupboard gave us the Weekly Initial Jobless Claims, which will become a distant memory later this morning when the Jobs Jamboree for Dec kicks off. But for those of you keeping score at home, the Weekly Initial Jobless Claims fell to 330,000 from the week before when it printed at 339,000 (actually revised up to 345,000) The 4-week moving avg of initial claims declined for the first time in 5 weeks, but.. The Continuing Claims rose 50,000 to 2,865,000. That's a lot of additions, eh?

I guess the most important thing to think about with this data, is that while the labor market MAY be getting better, there are still layoffs going on, and plenty of people still looking for jobs. And that doesn't draw a healthy economy no matter what color crayons you use.

And while we're on the labor stuff. Did you see the story on MarketWatch yesterday regarding what happens when unemployment benefits get cut? They followed a story from North Carolina, where unemployment benefits were cut last year. Within several months the unemployment rate fell, and by November it fell to a five-year low! WOW! I guess the Gov't should look at this as a beta test, eh?

Before I head to the Big Finish, I wanted to share this info with you. In 2013, the total value of China's international trade exceeded $4 Trillion, topping the U.S. to become the world's biggest trader of physical goods! WOW! Just another step toward their goal of having the reserve currency. And then one more thing that I came across this morning.. China imported 15.44 tons of Gold coins from Hong Kong in Nov. which is well above their average of 1.4 tons. Makes you wonder just how long it took to mint all those coins, eh? And where was it done?

For What It's Worth. Well.. I received an email from a long time reader that lives in Australia last night. He tells me that mining production is really slowing down, and with some mines shut down. We were having this discussion on the desk yesterday about how soon more and more mines could get shut down, as the weak price of Gold causes them to shut down, because they can't make money! Well, that shutting down of mines will cause some major problems with supply, and if things work like all my economics books told me, that should be a huge driver for a stronger price in Gold.

An addition to mining company problems, these slower times cause problems with credit, and that causes problems with obtaining loans, etc. So, we could very well see more and more of these shutdowns, that is until the price of Gold heads in the right direction again. And with that. It ends my discussion on Gold mining in Australia and its effect on the price of Gold.

To recap. It's a Jobs Jamboree Friday. Chuck's not interested, but the markets are, so he has to play the game with them and guess on jobs created, or made up, in December, which he pegs at 200,000. Both the BOE And ECB left rates unchanged yesterday with both reactions by the traders with the respective currencies surprising Chuck. Currencies are trading in tight ranges, and Gold is up $5 this morning.

Currencies today 1/10/14. American Style: A$.8895, kiwi .8215, C$ .9205, euro 1.3595, sterling 1.6415, Swiss $1.1015, . European Style: rand 10.7615, krone 6.1805, SEK 6.5255, forint 220.15, zloty 3.0705, koruna 20.1330, RUB 33.22, yen 105.05, sing 1.2705, HKD 7.7550, INR 61.90, China 6.1008, pesos 13.09, BRL 2.3935, Dollar Index 81.03, Oil $92.67, 10-year 2.96%, Silver $19.79, Platinum $1,422.75, Palladium $736.07, and Gold. $1,233.40

That's it for today. A very long day for me here yesterday, and then no nap really knocked me for a loop last night! Still feeling touch and go but I think as the day goes on, I'll be fine. Little Braden Charles was at the house last night, he performed his version of Twinkle, Twinkle Little Star for us, so cute! We played with a ball in the house, and got in trouble with "the boss". But, it's too cold to go outside and play! The boys and girls in World Markets are doing a weight loss competition. I have to wonder about hiring them, when they started it around Thanksgiving, and through Christmas! HA! I tell them that none of them need to lose weight, but they are scratching out ½-lb losses anyway! Oh well, I don't buy breakfast sandwiches for them any longer, so they are saving me money! And with that. It's a rainy day here, Snow to start the week, rain to end the week. I hope you have a Fantastico Friday!

Chuck Butler
EverBank World Markets

Posted 01-10-2014 11:49 AM by Chuck Butler
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