A Jobs Jamboree Friday!
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In This Issue.

* Currencies give back most of their gains from Thursday!

* Proving Chuck correct! .

* Draghi to buy less than investment grade bonds.

* Lagarde says countries need to take "bold polices", Really?.

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

A Jobs Jamboree Friday!

Good Day! . And a Happy Friday to one and all! The NL Division Series start tonight, with my beloved Cardinals playing the Dodgers in L.A. And early start tonight as opposed to tomorrow's start time, so that works for me, as I'm as tired as a one legged man in a butt kickin' contest! HA! So, see I'm not that tired that humorous stuff doesn't still pop into my head! I was almost a one-legged man 7 years ago, but the doctor had a different idea, and I am forever appreciative of that!

I wish the doctor had come up with a different idea for the Eurozone. The doctor in this case is European Central Bank (ECB) President, Mario Draghi. OK, you can't tell me that the markets have lost touch with what's right and what's wrong. You see, Draghi, announced yesterday, that the ECB would buy ABS (asset backed securities), and covered bonds. OK, nothing new here, but then he added, "from countries with less than BBB- grade credit ratings. Ahem, BBB- is below "investment grade". So, the ECB has joined the likes of the Fed in buying the "junk" from the banks and get it off their books, but put it on the Central Bank's books.

And here's what I'm talking about regarding the markets losing touch with what's right and wrong, for they took that news, and decided to get behind the euro and push it higher on the day. Huh? Well, that's what they did, and left me scratching my balding head and asking the Big Boss, Frank Trotter, if he had seen the markets act like this before, because I hadn't. He said, "well think about it, the banks no longer have that junk on their books, so they can go out and make new loans, thus spurring the economy". Leave it the Big Boss, to make me think about things differently. I was solely focused on the ECB becoming the Fed. But I still think the markets got this wrong.

And I think the proof is in the pudding, as this morning, the euro is giving back most of the ground it gained yesterday. I guess it was a delayed reaction to Draghi's announcement, eh?

In fact, the Aussie dollar (A$), N.Z. dollar / kiwi, krone, krona, ruble, yen and others that were basing in the sun yesterday, are all giving back most of their gains yesterday to end the week. This confirms to me that yesterday was nothing more than a "short squeeze" for it had no staying power, and I warned you yesterday that this could end up being the case. I think that after 22 years of following these markets I have a pretty good idea what's going on in times like this, eh?

And Gold is down another $8 this morning as it heads precariously close to the $1,200 level. Remember what I told you about the cost of production, and as Gold nears $1,200, it draws nearer to that cost of production. I'm already hearing about mines closing because they can't make a profit with Gold priced so low. That, closing of mines, will eventually be a good thing for Gold, in that supply disruptions will take place, and when there's a lack of supply, what happens? That's right. you get a Gold Star today!

IMF Managing Director, Christine Lagarde, was talking on Bloomberg with Tom Keene, and said "The global economy is at an inflection point: it can muddle along with subpar growth, " a new mediocre," Or it can aim for a better path where bold policies would accelerate growth, increase employment and achieve a new momentum. Countries are still dealing with the legacies of the crisis including high debt burdens and unemployment."

Well, I agree with her on one point, and that is that countries are still dealing with high debt burdens and unemployment. But the first point I would argue that the Central Banks of the countries, that are responsible for global growth engines, the U.S. and, the U.S. and, the U.S. are there any other that she might have been talking about? Well, I guess for good measure she could have had the U.K. and Japan in mind. And China doesn't participate with this group when it comes to high debt burdens and unemployment. So, the U.S. it is. and the Central Bank has done a lot that I would consider to be "bold policies", and still nothing. So, I have a suggestion for the Lagardes and Krugmans and Bernankes and so on of the world, why don't we try something really "bold"? Let's do nothing and get out of the way of the economy and see what happens! Now there's a novel idea Chuck, you should get a Nobel prize for that one!

Last weekend at the St. Louis U Homecoming celebration, Alex asked me if I could help his girlfriend with her economics class. I said probably not, for I don't think they teach Austrian Economics at Universities, but I did offer up my copy of Henry Hazlitt's famous book: Economics in One Lesson. She didn't take up my offer. yet that is.

Well, I've made it this far into the letter this morning without talking about the Jobs Jamboree that takes place today! Yes, I know, it seems like we just finished putting the August jobs report to bed, and it's time to deal with the September report! Front and Center on the Jobs Jamboree, before we see what games the BLS played with the surveys, let me remind you that IT IS AN ELECTION YEAR. So, when you see the numbers spike higher than expected this morning, just say to yourself, "it's an election year". You know, what I find interesting in the jobs report is that even the Gov't admits that underemployment in the U.S. is 12%...

Last month's total was only 142,000 so expect that to be revised upward, the BLS guy that sent that number through is no longer employed! HA! For we can't have bad employment numbers this close to the mid-term election! And for those of you keeping score at home. after the BLS jobs report is announced, go over to www.shadowstats.com and take a quick look at where John Williams calculates the unemployment rate to be. Why the huge difference you might ask? Well, one report is sponsored by the Gov't and the other is sponsored by a former Edward Tuck Scholar.

U.S. Factory Orders dropped 10.1% in August, thus wiping out the July 10.5% gain. I told you back in August when the July number printed that this would happen, and so the 3rd QTR in Factory Orders is a wash so far.

And in Ed Steer's letter this morning that you can find at www.caseyresearch.com he had a story about a High Frequency Trader (HFT) that has been indicted for manipulating commodities futures markets. Well it's about time! This is the first indictment under the anti-spoofing provision. this HFT was already found guilty of this crime in a civil suit last year, so this combination could get him a residential suite in the hoosegow. And why not? Apparently this guy profited in the amount of $1.6 Million with these illegal trades. I think the Gov't will make an example of this guy, so they can talk about how they prosecuted these guys. Well, even if this guy is found guilty, and he still deserves his day in court, that will bring the total of guys that are in the hoosegow to. 2! That's all? 2? I shake my head in disgust.

I have no FWIW story for you today, instead I have some very good stuff on Russian rubles. Check this out. And before you think that I'm promoting this currency, forget about it, I'm merely saying that we now offer it, it's your choice to either buy it or ignore it.

I heard the news today oh boy. The Russians successfully sold 10 Billion rubles of government bonds last week on Wednesday, after cancelling 9 bond auctions during the conflict with Ukraine. But with tensions easing in the conflict and a peace agreement on the table, the sense of normality has returned to Russia's money markets. Demand for the bonds was strong, which is a sign that investors are ready to lock in the higher yields offered in Russian bonds, than can be found in most corners of the world. Brazil would be the reigning heavyweight champion regarding high yields, but Russia's yields are nothing to walk away from for speculative investors.

Yes, the cease fire agreed between separatists militias and Kiev earlier this month is fragile at this point, but it is holding, with NATO announcing this week that a significant number of Russian troops had pulled out of Ukraine. I have to say that I like the direction that this Conflict has gone in recent weeks, and I believe the markets will begin to reward the Russian ruble, after they took a pound of flesh from the currency for its association with mother Russia.

I haven't spent much time here in the Pfennig specifically on Russia. There have been facts and comments scattered around over time but no real focus. So here are some things to consider should geopolitical problems get removed from the equation, and fundamentals return. Here, take a look .

1. Total External Debt rank of #22 (between Norway and Finland)

2. Public Debt to GDP #151 of #161 (low rank indicating low ratio)

3. Current Account rank of #4 in the world

4. Budget Deficit at just -0.5% GDP (compared to US at -4.0%)

5. Unemployment at 5%

6. Over $500B gold and currency reserves (ranking #6 behind Switzerland)

7. #1 in the world for proved reserves of Natural Gas

8. #1 in the world for exporting Natural Gas

9. #1 in the world for exporting refined petroleum products

10. #3 in the world for crude oil production

Yes, all of these belong to Russia.

As long time readers surely know EverBank World Markets (and Mark Twain Banks for some of us before that) has always given investors the opportunity to choose how they want to diversify their investment portfolio using currencies. While it isn't everyone's cup of tea we we've offered a few currencies along the way that no longer can be bought or sold in the open market, like: Indonesian rupiah, Malaysian ringgit, Thai baht, and few others. But that hasn't stopped us from looking to meet the demand of investors for currencies from around the world. The Ruble is one of those currencies that we offer.

Given the current worldview of Russia this is surely only for speculators with a viewpoint that if and as the geopolitical situation cools down the market might reward Russia for the fundamentals listed above. The Ruble is at a low point versus the US dollar, and perhaps it will trade lower. But for the speculator looking to take a risk on reputation repair providing some gains perhaps this is your chance.

To recap. The currency rally lasted just one day, giving credence to Chuck's thought yesterday that it would be a one day and done move, caused by a short squeeze. The ECB's president, Draghi, announced that the ECB will buy less than investment grade bonds as a part of their ABS and covered bond buying program. The euro is paying for this today. And today is a Jobs Jamboree, just remember. it is an election year. And Gold is falling ever so close to the $1,200 level, which is near the cost to produce. And Chuck introduces a new currency to the roster of currencies at EverBank World Markets.

Currencies today 10/3/14. American Style: A$ .8760, kiwi .7855, C$ .8945, euro 1.2620, sterling 1.6070, Swiss $1.0440, . European Style: rand 11.2555, krone 6.4815, SEK 7.7590, forint 244.90, zloty 3.3090, koruna 21.7685, RUB 39.75, yen 108.95, sing 1.2750, HKD 7.7590, INR 61.60, China 6.1525, pesos 13.40, BRL 2.4940, Dollar Index 85.99, Oil $90.89, 10-year 2.44%, Silver $17.03, Platinum $1,249.75, Palladium $761.75, and Gold. $1,207.19

That's it for today. I know, I know, a lot to read on a Friday morning. But look I appreciate you doing so, for I was up half the night, and have spent most of the morning "away". So paying attention to what I write makes me feel better about doing so under duress! Dusty Springfield is singing: You Don't Own Me. She was great, and we lost her too soon. Big game tonight for my Cardinals. I've told you this before but my dad always told me that the "odd games" have to be won in a series. So, game 1 is an "odd game". But it won't be easy, as these Cardinals always struggle for runs, and they are facing the game's best pitcher. UGH! But this why they play the games, for games are never won or lost on paper. Our 20 days without rain came to an abrupt end yesterday, with periodic deluges of rain. the roads were full of water, and the creek behind my house was a rip-roaring! Pardon me if I repeat something I've said, no party foul in doing so, I believe. But Spirit is playing: It's Nature's Way on the IPod. This song always give me the chills, and it was nature's way of telling me something was wrong in 2007, when I kept telling the doctors something was wrong. They eventually found me with Stage 4 Cancer. So, this song is special. And with that, it's time to get off this bus. and get to hopefully having a Fantastico Friday, I may not make it there, but sure hope you do!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 10-03-2014 5:08 PM by Chuck Butler
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