A Jobs Jamboree Friday!
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In This Issue.

* ECB tries to kickstart economy.

* Euro gets whacked and then rallies! .

* Positive rate differentials are key!.

* Japanese Housewives back in business! .

And Now. Today's A Pfennig For Your Thoughts.

A Jobs Jamboree Friday!.

Good Day! . And a Happy Friday to one and all! Rain, rain, rain. I get the feeling that maybe I should be looking into buying the plans to build an ark! HA! Tomorrow we plan to have Alex's graduation party, and the weatherman says rain. UGH! Oh well, I can't stop Mother Nature from doing her thing. She's going to do what she wants to do, whether I like it or not!

You know, the same could be said for Mario Draghi, the president of the European Central Bank (ECB). While I know all too well that today is all about the May Jobs Jamboree here in the U.S. I would like to take some time to talk bit about the ECB meeting yesterday first. The ECB President, Mario Draghi, decided to throw the markets an additional bone to his negative deposit rates. He also announced a cut in the benchmark rate cutting the rate down to .15%... so near zero. So, now the Eurozone has ZIRP, along with the U.S. and Japan! The Big Three with ZIRP. it must be catching, eh?

He also announced plans to get banks to begin to make loans with the LTRO money they've received.. Recall that LTRO was long term money from the ECB to help banks shore up their balance sheets. Now, I won't get into what this looks like to me, at this point, the markets however like the idea, so we have to go with that, right?

I went on and on yesterday about Central Banks messing around with economies, and I just kept singing to myself, when will they ever learn? When, will, they, ever, learn? But it's a done deal in the Eurozone now.. And boy did the markets not like the benchmark rate cut! They sent the euro to the woodshed, and it wasn't until it was there and had the razor strap taken to its backside (old timers like me, know all too well what that feels like in your grandpa's woodshed) that it got to come out. After the markets had taken their pound of flesh from the euro, it began to come back. And by the time I left the office around lunch time, the single unit was bruised and battered but not down for the count, and just like in the Rocky movies, it won the battle on the day. That's right, in the end. the euro was stronger in price than it was before the meeting! Sure sounds a lot like I explained I had thought would happen, eh?

The negative rates don't bother me that much, as I just mentioned to Chris Gaffney, who said he would talk about this in his contribution to the Sunday Pfennig & Pfriends. For all that does is get money that's sitting around out the door and to work, which can be good for an economy, and should take out the deflationary fears of the markets for the Eurozone. It's the ZIRP that really frustrates me. But it's done.. let's move on.

So, today is a Jobs Jamboree Friday! You know what I'm really looking for, besides the Average Hourly wages, and Average work week in this Jobs Jamboree? I'll be looking to see if there are any downward revisions to last month's lofty 288,000 jobs reported by the BLS. (remember 234,000 were added by the BLS in one of their hedonic adjustments!, in other words. Ghost Jobs!) You know what the BLS does when they finally get around to adjusting all the jobs they added out of thin air during the year don't you? Under the cover of night, they slip the adjustment through, and no one reports it. It just appears one day, flying successfully below the radar.. So, we may not see the kind of downward revision I would think would print today, but it's worth a quick peek to see anyway. Oh, by the way the so-called experts are calling for 215,000 jobs to have been created in May. I would say that if the BLS meets that number, the markets will be lost as to what it means, for it's not too hot, and it's not too cold, but it sure isn't just right!

Remember, going into the Jobs Jamboree this morning, we've had a weak ADP report, and a weak employment component of the ISM (manufacturing index), and the rot on the vine in the Challenger Jobs Cuts was very wide spread, showing an increase in job cuts of 45%! So, I would think that if we only really counted the apples in the cart, that the report would be disappointing today. But we always have the BLS to deal with and their hedonic adjustments..

So. the euro has drifted overnight after a wild and crazy day yesterday. But remains stronger than it was yesterday morning before the ECB meeting, and definitely stronger than it was after its trip to the woodshed. The dollar continues to have its soft bias to be sold as we end the week, but today, it will all be about the dollar and how it reacts to the Jobs Jamboree data.

I looked at the currency screen this morning, and was somewhat surprised to see the Aussie dollar (A$) holding to the gains it made yesterday and overnight. Yesterday, the A$ got on the rally horse and took it for a long ride, as the ECB announced it had entered ZIRP. That announcement cemented the positive rate differentials of the A$, and the buying the A$'s went bananas once again. The Reserve Bank of Australia (RBA) Gov. won't be happy about this move in the A$, and I'm sure some additional jawboning in an attempt to bring it lower, will occur this weekend, or early next week, so hold onto your hats!

As usual, the Canadian jobs report will also print today, but will be lost in the crowd of the Jobs Jamboree. I'm thinking that we'll see a +30,000 number for jobs added in May for Canada, which would reverse the negative -29,000 job loss in April! There's no clear direction for Canada, as the data prints strong, then weak, or neutral. But the Canadian dollar / loonie remains above 91-cents, which to me has become a line in the sand for the loonie on the downside.

Yesterday, I was reading the 5-Minute Forecast, and right there before my eye, was a piece on what's going on in China. For years now, "the 5" has quoted me on the stuff I report about China and their currency swap agreements, etc. Dave Gonigam at "the 5" does a great job with the letter each day.. But, I hadn't given them this info on China, so I had to see what it was about, and lo and behold, it's great stuff! So. here's Dave Gonigam at "the 5" on China.

"For years, we've chronicled the deals China has struck with its trade partners to do business using each other's currencies. China and Russia, China and Brazil, China and Australia, even China and its old/new enemy Japan -- they all have currency swaps and other arrangements in place to bypass the dollar.

Now it's... China and major U.S. corporations, according to new figures from the international payments system SWIFT. "The value of renminbi payments between the U.S. and the rest of the world rose by 327% in April this year from the same month a year ago," says the Financial Times, "as more U.S. corporations switched to using the Chinese currency to pay for imports from China."

Paying in renminbi can trim the costs of imports, the salmon-colored rag explains. And it's made easier by new renminbi-denominated vehicles in the financial markets.

HSBC estimates 18% of China's trade worldwide is now settled in renminbi -- a percentage set to double by the end of next year."

Chuck again.. WOW! Talk about gaining a wider distribution of their currency! I hadn't seen this news, so I thank Dave and "the 5" for bringing this to my attention, so I can bring it to yours!

Remember when the rage in the markets was the story of Japanese house wives, selling yen and buying high yield currencies like A$' and kiwi? Well, the financial meltdown put an end to that story and trade. But according to a Bloomberg article this morning, the Japanese house wives are back, and this time they've chosen the Brazilian real as their high yield currency, which I might add is certainly a high yield currency! A volatile one, and subject to Gov't and Central Bank interference, but a high yield currency nonetheless! In May, sales to real from Japan rose $310 Million VS $50 Million in the first four months of the year. So, the trend is up here.

Gold buyers sure liked the ECB announcement yesterday, and began to push the shiny metal back to $1,250 and more on the day. I think that the ECB announcement woke a few Gold traders from their slumbers, and they realized that now 3 Large economies have ZIRP.. and that should mean Gold soars! Well, it didn't soar, it simply added about $10 on the day. But going forward, one would think that as soon as the ZIRP story gets through the thick heads of traders, Gold would get back on the rally tracks for good. But we all know the skeletons in the closet for Gold don't we? Price manipulators, short paper trades, and Central Banks that don't want investors flocking to Gold and discarding their base currencies. But IF everyone bought physical metal, all these skeletons would be crushed!

We already talked about the Big Event in the U.S. Data Cupboard today. Just for fun, I took a peek ahead to next week, and saw that the Big Kahuna print next week is Retail Sales. I'll have to check out the BHI this weekend so I have an indication for you next week ahead of the data print!

For What It's Worth. OK. since I talked about how I thought Gold should be right on the night given the Big 3 taking on ZIRP, I saw this story on Ed Steer's letter, that he found on mineweb.com and thought it played well in the sandbox with my thought. So, this is Gold analyst Lawrence Williams talking. let's listen in.

"Gold may have found something of a temporary range in the $1240s over the past week. Sentiment has moved against it and barring some unforeseen event it may continue to fall through the early northern summer - traditionally a weak time for precious metals. But there is a huge dichotomy in its performance in that supply/demand fundamentals continue to look ever more positive, yet gold, and other precious metals, have been continuing to fall. Now whether this is, as some suggest, due to the machinations of the bullion banks suppressing the gold price on behalf some central banks (notably the U.S. Fed and the ECB), or just a collapse in pro-gold sentiment in the general investment arena remains to be seen, but if the latter some turnaround trigger could see gold positive sentiment return and the price soar - but when might this happen?

Jeff Nichols, one of the more down to earth of the normally pro-gold commentators, in his latest missive to clients, picks up strongly on the ever-improving fundamentals point. Despite a 5% fall in the gold price over the past couple of weeks he feels there is no reason for gold investors to despair. Easy to say as a commentator, but tough for those who may have seen their gold investments dive over the past two years. Is there no end to the decline?"

Chuck again. So, See. I'm not the only one that thinks that things should be looking different for Gold, but when is the question, which reminds me of a presentation I did in Vancouver a couple of years ago title: What Is Evident, may not be imminent. I think that applies to Gold very nicely. fits like a glove they used to say, before the OJ trial, now everyone avoids that saying!

To recap. Chuck spends a ton of time talking about two things today. First the ECB decision to cut its benchmark rate, implement negative deposit rates, and light a fire under banks to lend. the euro got whacked with a razor strap in grandpa's woodshed, but then turned around and rallied on the day! Second, the Jobs Jamboree this morning for May. Recent reports on employment haven't been good (ISM, ADP and Challenger) but we've always got the BLS to entertain us on Jobs Jamboree Friday!

Currencies today 6/6/14. American Style: A$ .9350, kiwi .8520, C$ .9150, euro 1.3635, sterling 1.6810, Swiss $1.1195, . European Style: rand 10.6795, krone 5.9695, SEK 6.6495, forint 222.60, zloty 3.0170, koruna 20.1350, RUB 34.72, yen 102.35, sing 1.2525, HKD 7.7525, INR 59.18, China 6.1623, pesos 12.87, BRL 2.2620, Dollar Index 80.43, Oil $102.73, 10-year 2.57%, Silver $19.02, Platinum $1,449.63, Palladium $841.00 and Gold. $1,252.02

That's it for today. Well, I got through another day of writing from home today. No worries, just need to rest. George Harrison is playing his great song: While my guitar gently weeps on the IPod. I would change that to while Chuck gently sleeps! HA! I just noticed that with today being the 6th that next Friday will be a Friday the 13th! Creepy! HA! I don't get into that stuff, but there's nothing wrong with it. Today is the 70th remembrance of D-Day. There have been many movies about D-Day. My dad was there, and he never wanted to talk about it. But if any of the movies are factual with what happened, then I truly understand no one wanting to talk about it. So, we need to stop for a minute and thank those military people that participated in D-Day today. Cards blow another game last night. and now head to Toronto, where the Jays are ripping the cover off the ball these days! UGH! I have a friend that lives in Toronto, and he's a big baseball fan, he's probably very happy with his Jays this year so far! And with that, I want to thank you for reading the Pfennig, and hope you have a Fantastico Friday!

Chuck Butler
EverBank World Markets

Posted 06-06-2014 11:56 AM by Chuck Butler
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