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A Jobs Jamboree Friday!

In This Issue.

* Dollar fights back on stronger data.
* A$ proves its resiliency after “the call”
* It’s PMI week around the world!.
* Follow up on the great gold thief!

And now. Today’s A Pfennig For Your Thoughts.

Good Day. And a Happy Friday to one and all! It’s Friday, and I’m one happy camper that it is Friday! We’ve been experiencing some real Chamber of Commerce days here in S. Florida, and I haven’t been able to enjoy them to the max, due to working and a fog that I seem to be in. All I want to do is sleep. I’m not hungry, I’m not antsy like I was the first 4 months on steroids. This is sort of like the infusion confusion I used to get the day after my infusions.. Maybe, the fog will lift for the weekend. It is Super Bowl Weekend, but the game is so low key with me here, 2 of the 3 years down here I’ve watched it by myself, and last year, Kathy bagged me before halftime! I was telling the young man that resides in the unit above me, Chris, that when I was his age, everybody had huge blow out Super Bowl parties, and nowadays it’s all about the “organized party at a bar” where you pay an upfront charge to just get in.. The Beatles greet me today with their song: Norwegian Wood.. I once had a girl, or should I say, she once had me.

That song will be in your head the rest of the day now for sure! As Bob Dylan said, “the times they are a changing” And so it is with everything in life. Just when you get comfortable doing something, you experience your own personal Minsky Moment. And the markets are doing just that! The new President, has played a card that no other president has played.. the “jawbone the dollar weaker card”. it shocked the markets that their new president would talk down the dollar, and his new chief of the National Trade Council would start blasting away at other currencies, which is the same as jawboning your own currency down. Now, we’ve had instances in the past where presidents would mention that they believe in a strong dollar policy, and then in a second sentence claim that the Chinese were keeping their currency too weak and they needed to allow the currency to appreciate.. Those are two opposite things folks. But now, the times they are a changing, and there’s a new sheriff in town.

On a sidebar, my good friend, Dennis Miller, the retirementor, wrote an excellent piece in his letter about a new sheriff in town, should you want to check that out, just click on the link above!

OK.. well, the lofty numbers the currencies had hanging next to their symbols yesterday, have faded, and the dollar has fought back. The euro no longer trades with a 1.08 handle, and kiwi lost its 73-cents handle, and yen dropped to 113 and change.. So you get the drift.. But the overall, for the week, the dollar is the worst performer, and that’s how trends begin, folks. Starts and stops, spurts and sputters but then you look back after a month or so, and say, Geez Louise, we started a new trend a few weeks back didn’t we! The dollar’s move yesterday was data driven, so let’s go take a look at the data to get an idea of what helped the dollar recover on the day..

But first I have a correction to something I said yesterday. I told you that The ISM (manufacturing index) number had just inched up in Jan to 54.6, but that was incorrect. I apparently looked at the data incorrectly, and the real print was 56, a much better than expected result for manufacturing, but again, playing along with the Tent Revival for Global Growth. And yesterday’s Data Cupboard had a couple of interesting prints. First, the ADP Employment Report was not as perky as forecast, with the forecast at 254,000 the actual print was 246,000.. Still a very strong number.. And Productivity, the thing that has worried the Fed, and economists for so long now, due to it falling month after month, show a very strong 1.3% gain in the 4th QTR.. So, a good day in data for the dollar, and the dollar responded accordingly..

The Aussie dollar (A$) has been quite resilient this week given the “phone call” between President Trump and Aussie PM Turnbull regarding a deal on refugee resettlement. The outcome of the call was called, “the worst call” by President Trump, and one would have thought that a comment like that would deep six the A$… It sure deep sixes the Mexican peso whenever discussions about Mexico, the wall, etc. get discussed by the President.. But not with the A$… It stood strong in the face of a mighty wind blowing from Washington, and kept its composure!

The Tent Revival for Global Growth received a tear in the tent last night. UGH! The Chinese Caixin (I explained this report last month) Manufacturing Index for January printed and it dropped 0.9 points to 51.9.. Better than expectations of 51.8, but still not in the direction the Tent Revival needs to keep building this revival of Global Growth. China also announced some small rate hikes in lending facilities, and open market operations. They are trying everything to slow capital flows and rein in the credit risks that everyone is talking about. And notice though that they didn’t hike their benchmark rate. So, like everything else that China does, it’s baby-steps. The renminbi though, has kept its level around 6.88 to the dollar intact.. A few weeks ago the renminbi was as weak as 6.91, but then the rumors began to circulate that the U.S. was ready to name China a “currency manipulator”. and the renminbi appreciated a bit… I’m still convinced that the Chinese are going to have to devalue the renminbi eventually, unless, and this is a BIG IF, the Tent Revival for Global Growth takes off! Then China could rev up their export sector and that would help China get out of the recession they’ve been in.

It’s been PMI week around the world. PMI is short for Purchasing Manager’s Index, which is a report that measures the Manufacturing sector.. And they use an index to show whether the sector is contracting or expanding. The 50 level is the line in the sand that designates that determination. And this week, we’ve seen PMI’s from the aforementioned China, and Spain, Italy, India, U.K., the U.S. and a few more that slip my mind right now. All of these reports have shown that manufacturing is expanding, as the index prints remained above 50 in January. Some might have slipped during the month, but remained above 50, so it’s all good for manufacturing around the world right now. Strange isn’t it? I mean, here in the U.S. the “world’s economic engine”, Factory Orders and Durable Goods along with Capital Goods have all lagged by a wide margin, and Retail Sales just aren’t the things that strong recoveries are made of. So go figure that one out and you’ll win a Gold Star!

The price of Oil backed off its level yesterday, but remains above $53. The Russian ruble traders allowed the ruble to rally. Yesterday, I said that the ruble wasn’t participating in the Petrol Currencies rally, and wondered why. And it was brought to my attention that there had been renewed aggression in the conflict with Ukraine. So, hopefully, calmer heads have prevailed there and things can get back to normal.

Well, have you noticed that I haven’t mentioned the Jobs Jamboree yet? I think this shows to go you that I really don’t care about the BLS Jobs report any longer. It no longer looks like the jobs reports of years ago, and I’m talking about how the report is put together, not the size of the numbers. Today’s Data Cupboard is dominated by the Jobs Jamboree for January. Right now, the so-called experts have the number of jobs created in January at 194,000.. And the Unemployment Rate holding at 4.7%.. We’ll also see Factory Orders for December, which have been very weak for some time now. So, somewhere between the 246,000 jobs ADP reported and the # the BLS reports , we’ll have our jobs created number.

Longtime readers know that I’ve always said that it’s not the number of jobs created that’s important, for you could see 100,000 jobs created, but if all 100,000 jobs were minimum wage, not breadwinner jobs, then the economy is going nowhere, but on the outside the labor market looks healthy.. What’s more important is the Average Hourly Earnings and the Average Work Week Hours. This tells us more about the economy than the number of jobs created. For years, I was the lone wolf out there telling people not to pay attention to that man behind the curtain (number of jobs) and instead pay attention to the earnings and work week. Of course nobody in the markets listened to me.

But here we are in 2017, and guess what I was reading on a bond dealer’s research paper last night? That they think that the more important pieces of the Labor Report is the Avg. Earnings and Work Week Hours! Wait! What? You mean some HUGE outfit out there, has finally picked up the ball on this, and figured this out? WOW! Well, either they figured it out, or they have a guy in the back room with a florescent light that keeps going on and off, that reads the Pfennig, and told his bosses about how the number of jobs isn’t important. I’m going to go with “they finally figured it out” , but I love the reference to Joe VS the Volcano option!

Gold had a nice day yesterday. Unfortunately, the paper trades kept Gold from having a better day. Here’s the skinny. Gold closed up $5.80 yesterday, but. that was $10 less than the high that was there close to the end of the day, when suddenly, a ton of paper trades, selling Gold hit the market, bringing Gold back to a $5.80 gain. Now, don’t get me wrong here, as a Gold holder, I’m glad to see the $5.80 gain, but would have been much happier with a $15.80 gain!

Did you see where a Circuit Court of Appeals in New York has reinstated the Silver rigging lawsuit against J.P. Morgan? Here’s the skinny on that taken from this website:

“Market Slant reported last night that the U.S. 2nd Circuit Court of Appeals in New York has reinstated the silver-market rigging lawsuits against JP Morgan Chase, finding that the district court judge who dismissed the lawsuits engaged in “impermissible fact finding.”

The case returns to the district court for more proceedings and presumably evidence discovery and deposition.

JP Morgan Chase & Co had won the dismissal of three private antitrust lawsuits, including from hedge fund manager Daniel Shak, accusing the largest U.S. bank of rigging a market for silver futures contracts traded on COMEX. The lawsuits accused JP Morgan of having in late 2010 and early 2011 placed artificial bids onto the trading floor, harangued employees at metals market COMEX to obtain prices it wanted, and made misrepresentations to a committee that set settlement prices.”

To recap. The currency rally fizzled out again yesterday, but this time the dollar rebounded after some strong economic data printed in its favor. Today, we’ll see the January Jobs Jamboree, and Chuck goes through his monthly tirade about how he doesn’t care about the report other than the Avg. Earnings and Work Week Hours. The A$ is showing some strong resiliency especially given “the worst phone call” this week between the leaders of the U.S. and Australia. The price of Oil slipped a bit, but remains above $53, and Gold added $5.80 to its value, but it could have been $10 higher.

For What it’s Worth.. This will be on the “lighter side” of stuff today. First though, do you recall when I told you about the guy that got caught stealing Gold from the Royal Canadian Mint by concealing the Gold where the sun doesn’t shine? Well, here’s the follow up from that original story. and it can be found here:

Or, here’s your snippet: “The former Royal Canadian Mint employee who apparently used his rectum to smuggle 22 solid gold “pucks” out of the secure facility in Ottawa has been given a 30-month prison sentence and must pay a fine of $190,000.

In November, 35-year-old Leston Lawrence was found guilty of stealing the 22 pucks from the mint on Sussex Drive, and of laundering 17 of them through Ottawa Gold Buyers (the cheque for an 18th puck never cleared because that puck was seized by police).

Lawrence was also found guilty of possession of property obtained by crime, conveying gold out of the mint and breach of trust by a public official.

Ontario Court Justice Peter Doody ruled Thursday that Lawrence would have to serve an additional 30 months if he doesn’t pay the $190,000 fine within three years of being released from prison.”

Chuck again. I still shake my head in disbelief that this went on so long before he was caught.

Currencies today 2/3/17. American Style: A$ .7648, kiwi .7268, C$ .7670, euro 1.0742, sterling 1.2490, Swiss $1.0043, . European Style: rand 13.4420, krone 8.2613, SEK 8.7912, forint 287.74, zloty 4.00, koruna 25.1465, RB 59.74, yen 113.13, sing 1.4142, HKD 7.7589, INR 67.20, China 6.8811, peso 20.56, BRL 3.1238, Dollar Index 100, Oil $53.69, 10-yr 2.48%, Silver $17.49, Platinum $1,001.55, Palladium $762.20, Gold $1,215.55, and we’ll see new SGE Gold prices next week, when China returns from their weeklong holiday.

That’s it for today. Let’s Go Blues! Hey how about that? Our Blues turned the tables and won last night 5-1! I was talking to the Big Boss, Frank Trotter yesterday, and when he was getting ready to hang up he said, “pitchers and catchers report soon”! He knows how much I love baseball (he’s a fan too!) and wanted to end the conversation on a happy note. So, who are you rooting for in Sunday’s Super Bowl Game? I’m going to root for the Falcons. When I was a young boy, we had a neighborhood football team called the “Wyoming Street Falcons” So, you see there’s a connection there, and besides, I think all my friends would disavow any acquaintance with me if I said I was rooting for the Patriots! Shoot Rudy, I would not like myself I said that! You’ve got 10 days to make sure your Sweetheart is taken care of. 10 years and more ago, Chris Gaffney and Chuck would go to the Galleria at lunch time on Valentine’s Day, to buy our gifts for our wives. But like all good things, they come to an end, eventually. You might want to write that down or blaze it into your brain.. that all good things come to an end, eventually.. That way when a good thing comes to an end, you won’t be all shocked and saddened, you ‘ll just say, “Hey! All good things must come to an end” and then move on. And with that, A Flock of Seagulls take us to the finish line today with their song: Space Age Love Song. It’s time to get off this bus today, and send us all to the corner of a Fantastico Friday! Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts

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