Search results matching tags 'Labor' and 'Jobs'

US labor data confirms another round of easing is on the way...

ChuckButler — Mon, 10 Sep 2012 15:57:01 GMT

* Labor data confirms another round of easing...

* The euro's future moves to the German courts...

* China growth fears increase...

* Gold pauses, but remains in an upward trend...

Good day. And welcome to another week. We had some great weekend weather which I took advantage of watching my son's football game Saturday and daughter's soccer and field hockey games yesterday. None of the games resulted in wins, but I enjoyed myself in spite of the outcomes. The labor data here in the US provided the equity markets with a pleasant outcome Friday as stocks ended the week on a positive note. The dollar didn't have such a good week, dropping just over one and one half percent vs. the major currencies. This week will be dominated by the FOMC meeting here in the US and the German constitutional court ruling on the other side of the pond.

But we will start with a recap of events on Friday. The US labor department reported the biggest decline in factory jobs in two years, contributing to a disappointing increase in payrolls during August. The US economy added just 96,000 jobs last month after a revised 141,000 increase in July. The median estimate of economists surveyed by Bloomberg called for a gain of 130,000 jobs. Factory payrolls declined by 15,000 workers last month and was the major contributor to the drop in jobs. Details of the report showed the workweek shrank, and the number of industries hiring new workers plunged to the lowest level in almost three years. Definitely not a good sign for the prospects of the unemployed factory workers, and exactly what the current administration didn't want to see. A lot was made of the rebound in the auto industry, but the data showing manufacturing jobs have decreased throws cold water on that line of thought.

But the President and his supporters can still point to the unemployment rate which dropped to 8.1%. Yes, the number of people working dropped, at the same time the unemployment rate also dropped. Much like last month, the unemployment rate and monthly jobs data seemed to be in conflict. But unlike last month when the difference was blamed on inconsistencies in the generation of the reports, this month's conflict could be more easily explained. Americans are leaving the workforce at a faster pace than they are entering it. 368,000 Americans left the labor force last month, most of them giving up looking for new work. The participation rate, which shows the share of working-age people in the labor force, fell to 63.5% from 63.7%. There are currently fewer working-age people in the labor force than at any time since September 1981. That one piece of data is a great indicator of just how bad things are here in the US.

The labor data have increased the odds of action by Bernanke this week. The Federal Open Markets Committee will be meeting on Wednesday and Thursday, and the Chairman is expected to announce another round of stimulus for the markets during his press conference Thursday morning. During my presentations out in San Francisco, I shared my thoughts that there was just slightly higher than a 50% chance of another stimulus announcement this month. I felt it was just too close to the Presidential election for the Fed to act; as they try to avoid the appearance of being too political. But Chairman Bernanke has pointed toward the stagnant labor market as the key to further stimulus, and Friday's report should provide him plenty of cover to avoid looking too political. The markets are certainly expecting Bernanke to announce another round of stimulus; I saw a survey this morning which put the odds of another stimulus announcement this week at 99%!!

The question now is exactly what will Bernanke announce. Some now believe he will model his new program off of the ECB's, announcing unlimited additional bond buying. This would allow the Fed to continue purchasing bonds until they feel the economy shows more definite signs of recovery. The advantage of this program, as shown by the reaction to the ECB's announcement last week, is that the markets can't question the ability of the central bank to take action. But unlike the ECB program which is solely aimed at sovereign debt within 3 years, the Feds new program will likely be aimed at mortgage debt with longer maturities. Another difference is that the ECB won't buy bonds unless a country asks for a rescue, and then the bond purchases will come with austerity commitments by the country seeking help. The Fed's quantitative easing program won't have any austerity measure tied to it, in fact it is more of an 'anti austerity' program adding to our deficits and debt in the interest of stimulating growth.

Friday's labor report and the resulting increase in expectations for another round of stimulus led to a rally in gold and treasuries and a continued fall in the value of the US$. Investors, worried about the inflationary impact of additional stimulus measures, took gold to the lofty levels it was trading at back in March. While prices moved down a bit going into the weekend, gold is still firmly entrenched in an upward trend and certainly looks like it will challenge it's former highs.

The dollar lost ground vs. most of the major currencies on Friday, ending a week in which the dollar index fell over 1.5%. I guess the 'Chuck is off the desk rally' held true again. In years past, whenever Chuck is off the desk for an extended period, we always seem to have a currency rally, and last week's dollar action was a confirmation of this pattern. As I explained last week, the reason for the fall in the US$ is a fairly simple case of supply and demand. The Fed will be creating a whole lot of dollars which it will be using for the bond purchases, and this increase in supply will eventually lead to inflation. It may not be reflected immediately in the price of goods and services, as international investors still seem to have an appetite for the freshly minted currency. But eventually the demand will slacken, and at that point we could see a spike in inflation. Bernanke has told us he is aware of this risk, but he is convinced the Fed can pull the newly created dollars back out of the markets as fast as he is adding them. I guess we will just have to wait and see if he is correct, but the markets are starting to hedge their bets.

The ECB action last week helped the euro push above the $1.28 handle, but it gave it back and is hovering just below it this morning. Concerns over the German Constitutional ruling due out this week, combined with renewed concerns in Greece put a lid on the appreciation of the single currency. The German court is expected to give its ruling on Germany's participation in the European Stability Mechanism on Wednesday. The court is expected to allow for Germany's participation, but currency traders are worried they may put stipulations on any future participation of Germany in European bailouts. Both German Chancellor Angel Merkel and Finance Minister Wolfgang Schaeuble are confident the German court will allow the establishment of the ESM, allowing the bailouts to continue.

Greek Prime Minister Antonis Samaras is due to meet officials from the ECB, IMF, and EU today. Samaras failed to secure an agreement to the 11.5 billion spending cuts required for the release of the next round of rescue funding. After this year's two elections, Samaras is operating with a minority government and must get his two coalition partners to agree to the austerity measures. At least one of the two is demanding the cuts be combined with growth measures. "The recession is deep and if these measures aren't accompanied by growth measures, they will be ineffective," according to Greece's Democratic Left leader Fotis Kouvelis. "Our European partners need to know that Greeks can't take anymore. Nothing can be taken for granted." Sounds like we could be in for some more volatility in Greece. We warned you that the rollercoaster ride of the euro isn't over yet, so just make sure you are strapped in!

The Canadian dollar rallied to a yearly high this morning after a report showed employment in our northern neighbor rose faster than forecast. Canadian employment rose by 34,300 jobs in August, offsetting a decrease of 30,400 the month before. The unemployment rate remained at 7.3%, right on target with median forecasts. While the number was definitely a positive sign, the Canadian economy is expected to remain in a slow growth mode. Last week the Bank of Canada left the key interest rate unchanged at 1% in an effort to encourage investment and consumption to drive growth.

Carney has reflected a hawkish tone, as increases in the prices of commodities which make up the majority of Canada's exports threaten to push up Canadian inflation rates. The increase in commodity prices caused the BOC to reiterate that interest rates may have to be raised in order to prevent inflation from accelerating. Following last week's BOC meeting, Carney said "some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." Higher interest rates would give even more support to the Canadian dollar, sending it to new yearly highs.

The Australian dollar moved lower in early European trading after a report showed China's imports slowed. Both Canada and Australia have commodity driven economies, and the commodity markets are dependent on strong demand from China. A report released earlier today showed China's imports slid 2.6% in August from a year earlier, the first decline since January. The same report showed Chinese exports rose 2.7% and a different report showed production increased 8.9%. The Chinese President sounded a warning, saying China's economic expansion faces 'notable downward pressure'.

The pace of the global economic recovery is going to be dependent on Asia, as both the US and Europe's economies continue to struggle. So the news that Chinese imports slowed are worrying. China has been slowly changing from an export driven economy into one driven more by internal consumption, so the slowdown in imports is concerning. And concerns regarding the Asian growth prospects were heightened further with the release of Japanese GDP measures which showed the economy grew at just .7% during the 2nd quarter, less than the preliminary reports which predicted a 1.4% increase. The median forecast of economists was right in the middle of the two figures at 1%. The spending which was necessitated by last year's earthquake and tsunami helped push GDP up slightly, but that spending is now over and gridlock in the Japanese parliament is preventing any additional stimulus. There is a good chance the Japanese economy could slip back into contraction in the 3rd quarter. I continue to warn against investments in the Japanese yen, and actually look at it as one of the currencies which could fall the most as investors start to move back into higher yielding currencies.

To recap. Friday's monthly jobs reports showed a US economy which is still struggling to recover, and put the possibility of a stimulus announcement by the Fed at almost 100%. The future of the ESM (and therefore the euro) rests in the hands of a German Constitutional court which is expected to rule later this week. But the court is widely expected to rule in the euro's favor, and the single currency continued to rally. The possibility of another round of stimulus had gold rallying along with the commodity currencies. The loonie hit a yearly high but the Australian dollar moved lower after a Chinese report showed imports decreasing. Japan's GDP came in at ½ of what was originally predicted, and further stimulus isn't in the cards for the Japanese yen.

Currencies today 9/10/12. American Style: A$ $1.0353, kiwi .8106, C$ $1.0239, euro 1.2781, sterling 1.6009, Swiss $1.0562. European Style: rand 8.1789, krone 5.7822, SEK 6.6390, forint 223.04, zloty 3.2178, koruna 19.177, RUB 31.7243, yen 78.28, sing 1.2365, HKD 7.7559, INR 55.3875, China 6.3377, pesos 12.9622, BRL 2.029, Dollar Index 80.336, Oil $96.46, 10-year 1.67%, Silver $33.6925, Gold $1,734.57, and Platinum $1,596.75

That's it for today. Tough loss for both our football teams this weekend. Mizzou looked good for the first three quarters in their opening SEC game vs. Georgia, but just couldn't hang with the dawgs at the end of the game. And the St. Louis Rams dropped their season opener during the final 10 seconds of the game played up in Detroit. My son's high school team got routed on Saturday morning after their game Friday night was delayed because of a storm which rolled through during the first half. Not a good football weekend, but I enjoyed it still as the weather was absolutely fantastic Saturday and Sunday. The trading floor has a new look this morning as workers installed several new desks over the weekend to keep up with our growth. Things are a bit cozier now and I'm sure the noise volume will increase as we put butts in all the new seats; but that is what I like about being out on the floor, all the noise and activity are what makes it a trading floor. Gone on a bit long this morning, so I will just thank all of you readers for sharing your morning with me. Hopefully this will be a Marvelous Monday and a great start to your week!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

It’s All About Jobs

JohnMauldin — Sat, 07 Apr 2012 19:35:00 GMT

Just Trying to Keep Up
Participating in the Labor Force
Some Good News on Employment
San Francisco, Denver, Austin, Philadelphia, Washington DC, Fort Lauderdale, etc.

Today's employment numbers were decidedly soft, but the unemployment rate went down anyway, and that is about the best you can say. And this being a holiday weekend, it provides us an opportunity to look deep into the employment numbers, while we put off thinking about Spain for at least a week. And who knew that being an unmarried Asian-American in the US was a risk for unemployment? Plus a few other interesting items will make for an interesting letter.

Just Trying to Keep Up

March saw "only" 120,000 jobs created. Expectations were for 200,000 new jobs. It wasn't all that long ago that any positive number would have been seen as good, but with the last six months averaging 200,000 jobs, this was disappointing. It gives force to the worry that once again we could see the employment numbers get soft during the spring and summer. And adding to interest in the topic, the employment numbers will take on a decidedly political tone this summer, as every poll shows that jobs and the economy is the #1 thing on voter's minds. This will be underscored only four days before the presidential election on Tuesday, November 6, as the jobs report for October is scheduled to be released on Friday, November 2. Think that one won't be analyzed more than usual? I keep writing that the current release is adjusted so often that it is hard to see more than a trend in the actual monthly releases, but that will not keep pundits from using the release to support their candidate with all the spin they can muster.

There is reason to believe that today's lower number was partially due to the weather being so good in the earlier part of the year, so that what is usually seasonal employment started earlier than is typical; so it might be better to average the last two months, which is still disappointing in that it barely stays ahead of population growth. At this rate it will be another three years before we get back to new employment highs, and that does not factor in any population growth. And it also assumes there is no recession in the meantime. Given that the US must start at some point to get its budget balanced, there is little hope that more government spending (aka stimulus) is on the way.

The Bureau of Labor Statistics churns out a massive amount of data each month. Let's look at one table and then discuss what we see. This is Employment Situation Summary Table A of the Household Data report, seasonally adjusted.

First, the unemployment rate fell by 0.1%, to 8.2%. But we see that the number of people who are actually employed dropped by 31,000, so how can the unemployment rate fall? Because the number of people looking for a job dropped by 164,000. If you aren't looking for a job, you are not considered unemployed. Thus the participation rate, or the number of adults either working or looking for work, dropped by 0.1% to 63.8%.

Note that this table shows 133,000 new jobs. This is the HOUSEHOLD report, which is the report created from a survey of households. The 120,000 new jobs number is from the ESTABLISHMENT report, which is a survey of established businesses, plus a guess as to the number of jobs created from new businesses that have been born in the last month, also known as the birth/death ratio. This month the birth/death number added 90,000 new jobs to the total number. The B/D ratio is a very volatile number. It is based on data from the last five years and is projected forward. Again, the unemployment number is taken from the household survey, and the new jobs number is taken from the establishment survey. While you can get a new jobs number from the household survey, it is notoriously volatile and essentially useless as a month to month indicator. As an example, it was 428,000 in February. Variations can run in the high hundreds of thousands month to month.

But over time the household survey gives a pretty good picture and eventually comes quite close to the establishment survey, although there are often some major adjustments after a year or more that help bring the numbers into alignment with the actual numbers that come in from tax data.

Now, let's look at a few other items. You can find employment by age, race, education, and gender. This page has a summary, although you can get very detailed data if you want to. For instance, this month we find that those with a college degree have a 4.2% unemployment rate, while 12.6% of those who did not finish high school did not have a job. Teenagers have a 25% unemployment rate. That number falls with each ten-year increase in age, until we get to those who are over 55, who are down to only 6.2% unemployed. Women have a lower unemployment rate than men at all ages.

Married men and women (spouse present) seem to fare better, with an average unemployment rate of 5.2%. The graph below shows us that married men tend to lose jobs faster during a recession but also get back to work quicker. I guess it helps you find a job if you have someone reminding you to go to work every morning.

If you had never been married you had a 12.5% chance of being out of work in March. For what it's worth, Asian-Ameroicans seem to do slightly better in most categories than whites, while African-Americans have almost twice the unemployment levels. Hispanics are about halfway between whites and blacks across the board. One odd thing that stuck out was that married white couples have a lower rate (5.3%) than Asian couples (6.2%) while never-married whites are unemployed at 10.5% and Asians at 9.2%. I am sure my readers, both Asian and white will have all sorts of anecdotal reasons for this, but even though I have Asian daughters and black sons (adopted, for those who wonder how), I don't get that one. You can find more data than you want to think about athttp://www.bls.gov/web/empsit/cpseea10.htm .

Participating in the Labor Force

Earlier we talked about the "labor-force participation rate." TThis is the percentage of working-age persons in an economy who are employed or are unemployed but looking for a job. Typically "working-age persons" is defined as people between the ages of 16-64. People in those age groups who are not counted as participating in the labor force are typically students, homemakers, and people under the age of 64 who are retired.

Let's look at three graphs from the St. Louis Fed FRED database. The first is the participation rate of men since the late '40s, and the second is the participation rate of women.

The first graph shows the participation rate of men falling consistently since the 1950s and then plunging since 2007. This is a 20% drop overall. Contrast that with the significant rise of women in the labor force until about 1995 and the gradual decline since 2008. In the United States the average labor-force participation rate was usually around 67% (since 1990) until the recent recession.

Let's look at one last graph of the total participation rate, but this time it will not be seasonally adjusted. Note the very large seasonal volatility in the number. This was especially true when they began collecting the data in the late '40s, but the seasonal variation has lessened with time; and since the recession it has fallen back to where it was in the late '70s. This just demonstrates in yet another way that more people want a job than can find one.

Just as disappointing as the total new jobs this month was the average work week fell, especially in manufacturing. This does not bode well for the next few months. Interestingly, the average wage for manufacturing is now 2% below the wages paid in the service industry.

Some Good News on Employment

Looking elsewhere, we can find some good news on employment. The polling company Gallup produces its own household survey each month. Gallup does continuous daily polling all through the month, while BLS takes a sample week in the middle of the month. While the Gallup overall unemployment number was at 8.4%, higher than that of the BLS, it did drop sharply in the last half of the month. And if they use the same seasonal adjustment the BLS uses, the number drops to 8.1%. Both are down sharply over the last month, and Gallup noted that most of that drop was in the last two weeks.

Gallup makes the following comments at the end of its release this week (http://www.gallup.com/poll/153761/Unemployment-Declines-March.aspx?ref=more):

"… The March and January rates are the two lowest since Gallup began monitoring and reporting unemployment in January 2010. They are also consistent with Gallup's other behavioral economic data for March showing a new high in Gallup's Economic Confidence Index and a post-recession high in itsJob Creation Index as well as strong consumer spending.

"While the sharp drop in the U.S. unemployment rate during recent months is clearly good news, it raises some significant economic questions. Traditional economic analysis raises the question of why the unemployment rate is falling much more rapidly than can be justified by the modest pace of current economic growth. Answering this question is essential to determining the sustainability of the declining trend in unemployment.

"Federal Reserve Board Chairman Ben Bernanke made this issue the centerpiece of his recent speech to the National Association for Business Economics, noting, 'the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion.' He went on to explain his hypothesis that companies shed many more jobs than necessary during the recession and financial crisis of 2008-2009, and now they are correcting their workforces for this understaffing of the past. The chairman went on to suggest that achieving further declines in the unemployment rate is likely to require a more rapid pace of economic growth going forward.

"If Bernanke is right, then the rapid decline in the unemployment rate might be approaching its end as individual businesses achieve a right-sizing of their workforces. Further, traditional economics also suggest that many people who have been sitting on the sidelines waiting for the economy to improve might decide that now is the time to seek a job, increasing the baseline figure used to calculate unemployment. In turn, this could keep the unemployment rate from decreasing or even send it higher, negatively affecting economic confidence and the overall economy – not good news for political incumbents, including the president.

"On the other hand, the economy might continue to build on the momentum indicated by the current positive trend in Gallup's behavioral economic data, or perhaps the economy is already growing faster than the current economic data suggest. Either way, if true, the unemployment rate could fall below 8.0% in the not-too-distant future – particularly if the workforce does not grow – meaning good things for the economy, incumbents, and the president's re-election effort."

Gallup had one more chart that does not bode as well for political incumbents, although even here they find a bright spot in the direction of the data. We will close with this. Gallup's US underemployment measure combines those unemployed with those working part-time but looking for full-time work. As a result of sharp declines in both of these groups, the underemployment rate, on an unadjusted basis, fell to 18.0% in March from 19.1% in February 2012. The underemployment rate declined to as low as 18.0% last July before reversing course in August; it also increased from November through January. This compares with the BLS U-6 unemployment rate of 14.5%, which is the rate of unemployed plus those who are part-time but want full-time work.

Employment and the economy in the US are getting better, just not as fast as we would like. And the world is still vulnerable to a renewed crisis in Europe, which seems to be coming back around. David Kotok notes that Greece is "in a downward death spiral." He continues:

"The private losses on Greek debt are mostly taken. The government/institutional/official losses are in the hands of politicians and still lie ahead. The Greek economy shrinks as the debt burden grows. This perpetual subsidy from others is on an unsustainable collision course with eventual Greek financial collapse. Meanwhile, 92 members of the Greek parliament have offered amendments to water down the austerity budget (hat tip to Barclays). The Greek prime minister vows to defeat all of them. Next week Greece will announce its bank recapitalization plan. Those banks that are deemed 'viable' will be able to gain financing from the ECB. Those that are not will need to fund liquidity from the Greek central bank under the Emergency Liquidity Assistance (ELA) program (hat tip to Credit Suisse). Note that ELA lending is central bank advances with lower-grade collateral. The Greek tragedy continues.

"We are tracking ELA balances in every euro zone country. It is not easy to do. The central banks of the 17 euro zone nations do not break it out in a single available figure. They also report with a lag. There is little reporting consistency among them. Greece has only revealed its ELA balance through November. We estimate it was about 40 billion euros then, up from about 7 billion in July. We have no idea what the balance is today. The European Central Bank could separately identify each country's ELA balance but chooses not to do so. Why not? Consider this: would you deposit your money in a bank that was in a national system with rising ELA? Not if you are sane. The flip side is that Eurozone folks have to guess. So they move money faster than they otherwise might and cause a bank run and an increase in that country's ELA. It is always better to cut off a small loss and be forthright about it than to maintain a growing loss and try to hide it. But politicians do not know how to learn that lesson."

Indeed. That seems to be the one consistency across nations. Politicians never learn until it is too late, and even then…

San Francisco, Denver, Austin, Philadelphia, Washington DC, Fort Lauderdale, etc.

Yes, all of the above cities are in my next three weeks. I am trying to figure out who exactly is creating my travel schedule. It could not have been me. I swear it has to be an American Airlines accountant, intent on fixing their bankruptcy with my travel! But some of the travel will be fun, with a little off-time thrown in. Details next week.

I was at a Dallas Mavericks game last week with a friend who is also a local investment advisor. I pointed out that while our record is mediocre, we have had a lot of injuries this season. If you factor in all of the players being back for the play-offs, we will have the deepest bench in the NBA. And yes, our team is "old," but that is what everyone said last year, and we won it all. If the old guys can remember the glory days of their youth, we could really make another run at a championship. And if Lamar Odom can forget what Kardashian sideshow he is in, get over not being in LA, and act like the star he is getting paid to be? Then we can just keep running real talent at teams that may have a better starting five but can't compete with our next five, let alone the 12 legitimate NBA players we will have. I will admit to maybe being a little animated. Perhaps I got a little overenthusiastic.

"John, why can't you be this optimistic about the economy when you write on Friday nights?" my friend asked.

But what would be the fun in thinking we'll go out in the first round? Sometimes you just gotta believe.

It's time to hit the send button. It's late and I need my beauty rest. Most of the kids and some friends will be here on Sunday, and we will fire up the grill. I hope you have a great week as well!

Your really an optimist at heart analyst,

John Mauldin

John@FrontlineThoughts.com

Jobs Jamboree Friday

ChuckButler — Fri, 03 Sep 2010 15:22:04 GMT

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In This Issue..

* Range trading currencies...

* ECB leaves stimulus in place...

* If Chuck were king for a day...

* Happy Labor Day!

And Now... Today's Pfennig!

Jobs Jamboree Friday

Good day... And a Happy Friday to one and all! It's also the Friday before a 3-day Holiday Weekend! YAHOO!, So... That in itself makes it a Fantastico Friday! The East Coast is getting hit by Hurricane Earl, so that really throws a spanner in the works for their Holiday plans...I sure hope everyone is safe! But here in the Midwest, the smell of charcoal, and of rubbed down meats, will be filling the air this weekend... I Love it!

It was a ping-pong day for the currencies, back and forth over the net... The net being the "level of the day"... For instance, the Aussie dollar (A$) played over the 91-cent net all day, and the euro played over the 1.2820 level all day...

The data on Thursday was all over the board, which may have acted as the paddles for the ping-pong day... The Big news was that the European Central Bank (ECB) kept their stimulus in place and did not even mention any "exit plans" for that stimulus. You may recall that the last time the ECB began to remove stimulus, it just happened to run into the exposure of the deficit dilemma in the Eurozone... Obviously, that stimulus removal was stopped at that time.

The ECB did revise upwards their growth forecasts for the 2nd half of the year... That's kind of cheating don't you think? I mean, 2 of the six months in the 2nd half have already posted their growth figures! But, they did revise them upwards, which is more than I can say for... Oh, never mind, I'm not going to open that wound on a Friday!

So... I've been in the saddle at my desk for about 40 minutes right now, and from what I've seen in the currencies is that the game of ping-pong will continue to be played today... That is, of course, unless we get a Big Surprise in the Jobs Jamboree this morning...

Yes, it's a Jobs Jamboree Friday, and here's the skinny on what I see happening today... First of all, you've just gotta love the way the Bureau of Labor Statistics (BLS) now breaks out the "private payrolls" from the overall figure, so that people can see the census workers getting cut... Just think back when all those census workers were being added, there was no "breaking out" of those numbers... No way! The BLS, Gov't and media happily talked about all the "jobs that were being created"... Disgusting I know, but it's a Friday before a Holiday Weekend, so I'm going to leave that laying right there...

So... Here's what I see... The Overall number of jobs lost in August will total -100,000... But when the "private payrolls" are broken out, we see that the U.S. probably created around 40,000 jobs... And the Unemployment rate will probably tick up .1 to 9.6%...

Let's accentuate the positive here... And say, YAHOO for the 40,000 jobs created, right? Yes, we should... However, 40,000 isn't anywhere close to the number of jobs that need to be created to sustain a strong or recovering economy... So... How will the markets view this report, for that, my friends is the rubber hitting the road this morning.

All I keep seeing on the TV's this morning are rumors that the White House is thinking about new ways to stimulate the economy... Can you say Japan circa 1997? I can, because I was there, trading currencies and remember it very clearly... Japan suffered a bubble popping in the early 90's, their stock market basically crashed, and their economy stumbled, fumbled, and ended up on its face... The Japanese Gov't tried everything... They did multiple stimulus packages... They cut interest rates to the bone... They implemented Quantitative Easing...

This went on for a decade, and still no gains in their economic growth, deflation had settled in all around them, and as the Japanese turned the calendar on a new millennium, all they had to show for all they tried to implement was a national debt to beat all national debts, ever!

Now... Hopefully, you now see why I've said for almost 8 years now, that the U.S. was turning Japanese... Yes, I really think so!

Just want to be perfectly clear on that, for someone told me yesterday that the Pfennig was "totally incomprehensible" ... I had a good laugh at that one!

So... Don't be surprised if in the next couple of weeks you hear about a "new and improved" stimulus package... Of course, if the stimulus money that's already been spent had been put to work properly, and not on pork projects, we might have seen some results, but even then I doubt it, for the Gov't has to get its hands out of the cookie jar! The Gov't needs to cut spending, stop manipulating the markets, and shrink... Now, those would be worthy things to do to help the economy... That, and taking the governor off small businesses...

OK... Of course that's what I would do if I were "king for the day"... Along with many other things that if you ever want to spend a day talking to me about them, you'll find out what I'm talking about!

Gold, has had a good week overall, but the last two days have been very choppy... Up $5 one minute, and down $3 the next... I would have to think that today's Jobs Jamboree outcome will give Gold a boost... That is unless there is a surprise. But as soon as the Jobs data is printed, I can see the NY trading desks clearing out, with the boys and girls heading to the Hamptons... And then the volume in markets gets thinned out, and by early this afternoon, the activity in the markets will be null and void of anything!

So... Any follow through on the morning's trading will not happen today... So be careful out there today, when you have thin markets, the volatility can be wild and crazy.

Like I said at the top... The Aussie dollar (A$) went back and forth over the 91-cent net yesterday, and that's all I've seen it do this morning, since I came in. Notice how all the talk about the election outcome that filled the news from Australia a couple of weeks ago, and weighed on the A$, has faded, and allowed the A$ to recover... This is what I was talking about last week when I said that the markets lose their focus too quickly these days... But in the case of the A$ and the elections, this was a good thing!

The Canadian dollar / loonie has lost its mojo for now, but it might find it next week when the Bank of Canada (BOC) meets (9/8)... Recall, that the markets have given up on a rate hike from the BOC, while I went out on the fat limb, and said I was keeping the light on for a rate hike from the BOC at their 9/8 meeting.

Should the BOC go ahead and hike rates, as I expect them to do, and not see the BOC talk down the rate hike, then the loonie could very well get is mojo back, yeah ba-by! (in my best Austin Powers voice)

The Brazilian real took off yesterday, and never looked back! The real began to rally in the morning with the other currencies, but as the other currencies began to back off and play ping-pong, the real continued to gain ground VS the dollar. Now... The question is this... Can the real hold on to these gains, and not give them up, like they've done all year... Have a good month, and then sell off... Have a good month, and then sell off...

Overall, year-to-date, the real is only up 1%, but then add in their high interest rate, and the overall return isn't anything to throw out with the bath water. The Japanese yen, has gained 10% year-to-date, but has no yield, but again... Not to be thrown out with the bath water!

Then there was this... The Economist ran a story that caught my eye... The magazine notes that "a return to recession is possible for the U.S., especially if Congress won't act to prevent reduced government spending and the Federal Reserve can't bring itself to offset contractionary forces in the economy. Another way of putting this is... That the risk of a double dip is entirely political in nature."

Hmmm... Chuck here... This is one of those times that I'm going to disagree with the Economist... The cards have already been played, so anything the Gov't does now, is too little too late... And... The Gov't needs to get out of the markets and stay out! Oh! And what's up with the Economist not wanting the Gov't to cut spending? Makes no sense to me... But, you see now, that even the Economist can be on the other side of the fence from me!

To recap... It was a day of tight ranges for the currencies ahead of the Jobs Jamboree this morning. Chuck thinks that 40,000 jobs will have been created but overall 100,000 jobs will have been lost, when taking in the Census workers. This is not the kind of jobs report that a recovering economy wants to see... And it's up in the air as to how the markets will react to this report... There was a day, long ago, when I could say without a doubt, that job creation would be good for the dollar, and job losses would be bad for the dollar... Not any longer... The mental giants in the markets have seen to that!

Currencies today 9/3/10: American Style: A$ .91, kiwi .7160, C$ .9480, euro 1.2840, sterling 1.5405, Swiss .9860, ... European Style: rand 7.22, krone 6.1425, SEK 7.25, forint 221.40, zloty 3.0790, koruna 19.2235, RUB 30.67, yen 84.50, sing 1.3455, HKD 7.7720, INR 46.63, China 6.8030, pesos 13.04, BRL 1.7255, dollar index 82.39, Oil $74.71, 10-year 2.63% (rising!), Silver $19.68, and Gold... $1,252.80

That's it for today... No game last night as all the rain made the fields unplayable... Back in "the day"... That would not have ever happened! But it did, so, no first game... And we went out to dinner instead! Tomorrow will be a fun day, as I gather the family, and we head downtown to watch our beloved Missouri Tigers play Illinois... My two older kids, Dawn, and Andrew, both graduated from University of Missouri, so they bleed black and gold like their dad! And then Sunday is the annual bar-be-que at the Butler house... Family, friends, good food (the smell all day of smoking pork), will be all around, and that makes me happy... The Cardinals will be on the radio... Shoot, can we do it today? HA! So with that, I bid you farewell... Thanks for reading the Pfennig, and I hope you have a Wonderful Holiday Weekend, but first, a Fantastico Friday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837