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Gold Has A Tub Thumpin’ Thursday!

* Dollar gets whacked again in Asia..
* Euro trades higher
* Aussies print trade surplus!..
* It’s a Jobs Jamboree Friday!

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

Good Day. And a Happy Friday to one and all! The first Friday of 2017 to boot! So, let’s make this a Fantastico Friday, eh? Gold sure had a day yesterday, let’s see if it can follow that up today.. And the shortage of renminbi in China is still causing traders to rethink their optimism toward the dollar, and it’s a Jobs Jamboree Friday! So, we have a couple of things to talk about today. I’m still flabbergasted at the Wikileaks cable that I highlighted yesterday, and wondering why in the world this isn’t getting headline news? The Greg Kihn Band greets me this morning with their seat bopping song: Remember.

Alrighty then. The dollar took another whacking in the Asian markets overnight, but appears to have stopped the bleeding for now, and is attempting to fight back. The euro traded up to 1.0610 overnight, but has backed off as the Eurozone received mixed messages in data prints. First, Eurozone economic sentiment as measured by the European Commission and reported in an index improved in December with the index number rising to 107.8 from 106.6 in November. The index was forecast to rise to 106.8, so it beat the expectations by a wide margin.. That was the good news. The bad news was that Retail Sales for the Eurozone fell in November by -0.4% But, you have to take into mind that the Rocktober Retails Sales were revised upward to 1.4% and so, in my mind, the November drop was just a breather by consumers in the Eurozone, after all the activity of Rocktober!

The Currency roundup will look much better to one and all this morning, that is unless you’re a trader and you’ve got short positions in any of the currencies or metals, because the last two days of trading this week have been so anti-dollar, that you would think that the strong dollar trend was coming to an end. But I’m not falling for that one again! I do a mea culpa on the strong dollar trend ending in the new Review & Focus, which is now available on the EverBank website, but you can find it here: I have to say I think that this month’s R&F is one of the best one’s I’ve ever written, it covers, debt, Treasuries, and Gold. Be sure you find time to read it!

I do think that this dollar weakness can stay around a few days though. The reason I don’t think it’s a trend yet, is simply that we’re still not trading on fundamentals, sentiment remains the main driver of the currencies and metals and bonds and shoot, stocks too! I explained my opinion on what’s happening yesterday, but for those of you who missed class yesterday, it goes like this: China made some moves and statements that caused a shortage of renminbi in the markets (they were attempting to stem the outflow of capital) and this caused the renminbi to rally VS the dollar, and as traders looked at this, they realized that they had gone too far, too fast with optimism toward the President-Elect and the dollar, and so a lot of those dollar longs got unwound. The second night, last night, of this move was even more impressive than the first night for the currencies.

Gold had a good day yesterday, not as good as it had gotten at one point in the day, but I’ll take the $17.10 gain, without complaint! The shiny metal is seeing some profit taking in the early morning trading and is down $4 at this point. I think that some short position holders got their lunches handed to them yesterday, and in my view it couldn’t happen to a better group! I’ll share with you something I said in the new R&F about Gold. Here we go:

I look at gold like it’s insurance in my investment portfolio against what I just explained could be the future of our country’s financial system. You buy flood insurance in hopes that your house never floods, right? You buy car insurance in hopes that you never have an accident, right? You buy health insurance in hopes that you never come down with a long illness, right? So, why wouldn’t you consider buying gold to potentially function as insurance for your investment portfolio?

Gold is an excellent diversification tool, because it: 1) has different pricing mechanisms than typical other holdings, 2) has a low correlation to the other holdings, and 3) adds intrinsic value. These are all criteria explained in Harry Markowitz’s Modern Portfolio Theory, of which I’ve been a fan for more than 25 years! – Chuck Butler Jan 2017 Review & Focus

Alrighty then. Today is a Jobs Jamboree Friday.. and like I told you yesterday, the experts say that the BLS will report that 183,000 jobs were created in December. In addition, I also told you that the key would be to look at how many of these “created jobs” were seasonal hiring and part time jobs. I think I told you this already, but in case I didn’t. There was a report by Harvard & Princeton economists Lawrence Katz and Alan Krueger that pointed out what kind of jobs have been created in the last decade. Krueger used to be a top White House economist until 2013, was quoted as saying, We find that 94% of net job growth in the past decade was in the alternative work category,” said Krueger. “And over 60% was due to the [the rise] of independent contractors, freelancers and contract company workers.” In other words, nearly all of the 10 million jobs created between 2005 and 2015 were not traditional nine-to-five employment. ”

Chuck again. WOW! I think I made a big deal out of this last month regarding “real bread winner jobs” so I don’t want to beat a dead horse (no animals were hurt here) and carry on about this, just wanted to point out what’s going on, because you won’t get this stuff on the evening news!

So, a strong, albeit hedonically adjusted, BLS jobs report today could wrap a tourniquet around the dollar’s bleeding, so watch for that. Of course the risk is always there that the BLS could disappoint, but I doubt that would happen at this point in the proceedings.

Last night in Australia, the November Trade Balance printed and was a nice surprise! Aussie November Trade was a Surplus! The first surplus in Aussie trade since March 2014! Exports led the way and imports were flat.. The Surplus was A$ 1.24 Billion and easily offset the Rocktober deficit of A$ 1.12 Billion. So average out the two months, and there’s still a surplus, and you’ve gotta love that from the island nation! Currency traders did, and pushed the A$ past 73-cents overnight.

Speaking of Trade Balances. Last week I reported that the U.S. Trade Deficit had widened once again. Did you know that our Trade deficit with China ratchets up to $1 Billion per day? And according to publishing guru, Bill Bonner in his letter,. “since 1980, when trade with the Middle Kingdom really got going, we have accumulated a trade deficit of about $10 trillion with China”

He goes on to say, “That is the money that built the factories that now undercut American manufacturers. that created a $225 trillion pile of global dry debt. and that corrupted and corroded the whole world’s financial system.” – Bill Bonner

The last time I saw Bill Bonner was at the Richard Russell birthday gala a few years ago, before Richard Russell died. In the lobby, Bill, Chuck and John Mauldin were sitting having a beverage, and a crowd of people surrounded us, and one guys spurts out. “I just want to know what the 3 greatest minds are talking about” We laughed because the conversation had been about something silly, and certainly not financial stuff!

When Richard Russell died, we lost a great voice for logic and common sense in markets. My good friends, the Aden sisters, Mary Anne and Pamela have taken over the Dow Theory newsletter, and reprint “Richard’s Thoughts” about once a week.. You should check their work out and you can do so by clicking here:

The price of Oil has risen again and is back above $54. And the Russian Ruble is on the rally tracks trading below 60 for the first time in a while. Did you see where an Russian official did the good cop bad cop bit with the European Union? He blasted them for keeping the sanctions in place, but then smoothed the feathers by talking about how the EU is still the number one trading partner of Russia..

The U.S. Data Cupboard today has, of course, the Jobs Jamboree, but also November Factory Orders, which will most likely be negative again. Speaking of the Jobs Jamboree once again, the ADP Employment report yesterday was a disappointment showing only 153,000 jobs created in December.. Hmmm.. That’s interesting, but I’m sure the BLS can make the difference up between 153,000 and the forecast 183,000 in a New York Minute!

Before I head to the Big Finish today. I just wanted to give you a heads up that this Sunday’s Pfennig will be on the Trump Trade. So, make sure you check that out when it shows up in your email box!

To recap. The dollar got whacked again overnight in Asia, but looks like it has wrapped a tourniquet around the bleeding early this morning, but the currencies held their gains so far. Gold had a good day yesterday gaining $17.10 and was up even higher during the day. The euro traded past 1.06 overnight but came back below the figure on mixed data messages. And Chuck gets into the R&F talk about Gold.

For What It’s Worth. Remember Jon Corzine? Remember his firm M.F. Global Holdings Ltd.? I remember the fiasco he created, and the losses that clients took when the Company collapsed… Well, after all this time, the settlement with Corzine has finally taken place. And no there was no jail time. Of course there wasn’t! UGH! Oh well, you can read the article on Reuters here:

Or, here’s your snippet: ”
Jon Corzine, former New Jersey governor and Goldman Sachs (GS.N) co-chairman, will pay a $5 million civil fine to settle a U.S. regulator’s lawsuit over the 2011 collapse of his commodity brokerage, MF Global Holdings Ltd.

Thursday’s accord with the U.S. Commodity Futures Trading Commission resolves the last piece of litigation against Corzine over MF Global’s rapid descent into bankruptcy on Oct. 31, 2011, as an estimated $1.6 billion of customer money went missing.

The agreement, which has been approved by a federal judge, bars Corzine from ever working for a futures commission merchant or registering with the CFTC. He also cannot ask insurers to cover the fine.”

Chuck again. of course Corzine’s lawyer pointed out that none of the criminal and civil probes into MF Global’s demise led to charges that Corzine engaged in intentional misconduct or fraud… Hmmm.

Currencies today 1/6/17. American Style: A$ .7340, kiwi .7020, C$ .7545, euro 1.0592, sterling 1.2382, Swiss $.9890, . European Style: rand 13.6490, krone 8.4990, SEK 9.0152, forint 289.75, zloty 4.1130, koruna 25.4970, RUB 59.93, yen 115.99, sing 1.4337, HKD 7.7548, INR 67.89, China 6.9018, peso 21.32, BRL 3.2098, Dollar Index 101.56, Oil $54, 10-year 2.35%, Silver $16.68, Platinum $960.70, Palladium $749.40, Gold $1,176.25, and SGE Gold $1,196.55

That’s it for today. it was a beautiful day here yesterday, and I was able to get outside a bit and gather some Vitamin D from the sun. I always end up feeling better when I’m here, because of that Vitamin D from the sun! I go to see my “winter oncologist” today. She’s not going to like the weight I’ve gained, but as long as I’m on these steroids there’s not much I can do about it.. stop eating I guess.. but that’s not going to happen! What a let down by our Blues last night. After a thrilling Winter Classic win against the Blackhawks earlier this week, the Blues lost 4-2 to Carolina last night, at home no less! UGH! It was time for the team to go on a roll and the blew it. Oh well, 37 days till pitchers and catchers report. The NFL playoffs start tomorrow. I’m thinking that the Patriots and Cowboys in the Super Bowl, but I would like to see the Steelers VS Packers! R.E.M. takes us to the finish line today with their song: The One I Love.. And with that it’s time to get off this buss today, and send you on your way to 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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