Currency Rally Gets Stopped At The Gate!

A Pfennig For Your Thoughts

February 4, 2019

* BLS says 304,000 jobs created in Jan. Chuck says hogwash!
* Eurozone PPI weakens… What will the ECB do?

Good Day… And a Marvelous Monday to you! The rain finally gave way to sunshine yesterday, and it brought everyone outside to bask in the warm sun. I watched the 1st half of last night’s Super Bowl at a friend’s condo upstairs, but then came back to my place to watch what I could before sleep entered into the equation. So, congratulations to the cheaters, I mean the Patriots who won their 6th Super Bowl. We’ve begun February, so welcome to February, the month that pitchers and catchers report, and I’ll be visited by my Spring Training Buddies to start the Spring Training games at the end of this month. That means I’ll be on vacation the last week of February… I know, I know, it used to always be around the 3rd week of March, but this is when it all works out and so I’ll be absent that week. The Beatles greet me this morning with their song: Michelle… My bell, those are words that go together well, my Michelle…

Well, the currency rally that was going on late last week, got stopped at the gate by a false Employment Report by the BLS… They claim that 304,000 jobs were added in January… However the Unemployment Rate rose to 4.00% from 3.86% the previous month. And despite 800,000 furloughed Gov’t employees that were without jobs in January… When things like this happen, I refer to John Williams, of Shadow Stats (www.shadowstats.com) And he explains things for us…

“Unaffected by the government shutdown, despite 800,000 workers furloughed or forced to work without timely pay, January Payrolls gained a headline 304,000 jobs. Yet, that was in the context of the initial 312,000 December jobs gain revising lower by 90,000, to 222,000.”
The Burning Platform (www.theburningplatform.com) had this to say, which I agree with wholeheartedly…. “There Are Lies, Damned Lies, Statistics and The Employment Report”

Oh, woe is me… the problem with all this is not so much that fact that the BLS lied to us, but that the markets bought the numbers and swallowed them hook, line and sinker! Shouldn’t someone with an ounce of brains say, What a minute here, these numbers don’t seem kosher? But nooooooo! They decided that they would buy what the BLS was selling them. Don’t worry they’ll figure out later that is was snake oil…

The Dollar Index, which I’ve explained through the years is not the best example of how to value the dollar, because it is so heavily weighted with euros, has bounced around a bit lately, and is stronger this morning at 95.70, reflecting the weakness of the euro after Friday’s walk down “cheaters’ lane”…

To Illustrate what I’m talking about, the Petrol Currencies, which aren’t a part of the components that make up the Dollar Index, are all on the rally tracks with the price of Oil above the $55 handle. The Russian ruble, Brazilian real, Canadian loonie, and Norwegian krone are all looking perky this morning…

Gold however, is getting sold in the early morning trading, and is down $7.50, after losing $3.60 on Friday. That’s $11 in the past two days, after Gold had been on a good run to the upside… I would say that this is normal given the quickness with which Gold moved upward. But then NOTHING is normal about the price action in Gold these days… And haven’t been since the fellow at the price manipulation controls woke up from his nap on September 8, 2011… Because all’s fair in love and war, and price manipulation… I would have to say for those that don’t believe in that stuff that it was about the time the dollar was strongly entrenched in its current strong dollar trend, that began when the hidden debts of the Club Med countries were discovered.

Normally I would say that this pull-back in the price of Gold would be an opportunity to buy at a cheaper level than last week… And I still want to say that, but who knows what the price manipulators are going to do next?

Have you been keeping up with the news from a financial system review that’s been going on in Australia? Well, it came to a head with a final report last week, with 76 regulation problems… But with no suggestion to beak up the powerful Aussie banks… This news brought some selling pressure to the Aussie dollar (A$)… This is important stuff so I have highlighted an article on it in the FWIW section today…

Earlier this morning, the Eurozone printed their latest PPI (wholesale inflation) and on a year on year basis it has slipped to 3.0% from 4.0% last January… This is not good for consumer inflation that the European Central Bank (ECB) has held out to be the carrot on the string. The ECB wants inflation above 2% before they’ll move their deposit rates out of negative territory. And this print explains the slippage in the euro from Friday…

It appears that this week will be the week that the Gov’t uses to print all the delayed economic reports of the past month… For instance, today, we’ll finally see the Nov. Factory Orders… Seems like it’s really not useful at this point doesn’t it? But it will print anyway, and when it does, I expect it to be negative.

We’ve still never seen Retail Sales for December… I wonder if there’s a problem with the data, in that, it stinks, and the Gov’t doesn’t want the public to know? I wouldn’t put it past the bean counters at the BLS and other Gov’t agencies that report on economic data. You would think that the Gov’t would have had enough time to massage the data or just let it print, as the difference between humor and tragedy is time…

To Recap… the currency rally of last week came to an abrupt halt for most of the currencies on Friday, when the BLS printed what I consider to be a farce of a jobs report saying that 304,000 jobs were created in January. Recall that they said 312,000 were created in December, but quietly, under the cloak of darkness, they BLS “revised” December’s number by 88,000 jobs to the downside! There are problems in Australia with their banks, and the way they do business, and that’s weighing on the A$, while the price of Oil ratchets higher and the Petrol Currencies get bought.

For What It’s Worth… I gave you a teaser earlier in the letter… And now here it is… An article about the Financial system review in Australia… And you can find it here: https://www.reuters.com/article/us-australia-banks-inquiry/australia-vows-to-clean-up-financial-sector-after-landmark-misconduct-inquiry-idUSKCN1PT099

Or, here’s your snippet: “A special government-appointed inquiry excoriated Australia’s financial sector for misconduct on Monday, referring two dozen cases to regulators for possible legal action but leaving the structure of the country’s powerful banks in place.
Regulators will be subjected to a new oversight body and the financial industry’s pay will be overhauled to remove conflicts of interest, according to the recommendations of the so-called Royal Commission. But the recommendations stopped short of measures that would threaten the A$400 billion ($289 billion) industry’s dominant position.

The recommendations come after the public inquiry heard 11 months of shocking revelations of the financial industry’s wrongdoing, including that fees were charged to the accounts of dead people and that cash bribes were paid over the counter to win mortgage business, wiping A$60 billion from the country’s top finance stocks.

The conservative government, which was initially opposed to the setting up of the inquiry, promised it would act on all the 76 recommendations. ”

Chuck Again… When I read the part of charging fees to dead people, I thought of all the shenanigans that Wells Fargo has been involved with these past couple of years… They didn’t cause the dollar to get sold…. I’m just saying…

Currencies today 2/4/19: American Style: A$.7226, kiwi .6890, C$ .7660, euro 1.1430, sterling 1.3055, Swiss $1.0026, European Style: rand 13.3750, krone 8.4622, SEK 9.0694, forint 277.39, zloty 3.7405, koruna 22.4705, RUB 65.44, yen 109.88, sing 1.3526, HKD 7.8465, INR 71.74, China 6.7432, peso 19.15, BRL 3.6575, Dollar Index 95.70, Oil $55.33, 10-year 2.69%, Silver $15.74, Platinum $818.88, Palladium $1,348.73, and Gold… $1,310.63

That’s it for today… I kept wondering when my daily dose of chemo was going to catch up with me, and I wonder no more, as it hit me at 1 o’clock in the morning last night… UGH! That was a nice run I had… Oh well, it is what it is… I can’t complain, for it’s kept me alive! so… pitchers and catchers report to spring training in about 20 days… I’m ready for some baseball! I received a video of my darling granddaughter, Delaney Grace, singing the National Anthem. She had sent it to Roger Dean Stadium as an audition tape to sing at a Spring Training Game… I was so happy to hear her hit every note and belt it out! Fingers crossed now… Aerosmith takes us to the finish line today with their song : Dream On… I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

Chuck Butler
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A Pfennig For Your Thoughts